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Brazil will enter 2019 at the top of the list of countries with the highest corporate tax rate in the world. France, which currently ranks first, will promote a reduction already announced by President Emmanuel Macron, who predicts a drop from the current rate of 34.4% to 25% by 2022. The tax rate on Brazil's corporate profits (applied by Revenue and Social Contribution on Net Income) is 34%.
The survey was conducted by the Organization for Economic Co-operation and Development (OECD), a group of countries with more developed economies and the highest rates in the world. . Brazil is not part of the organization, but it is asking for a vacancy.
The global downturn in the reduction of the corporate tax burden accelerated in 2018 with the adoption of a more aggressive policy by the United States, Belgium, and France. The economic team of President-elect Jair Bolsonaro has already indicated that changes in this area were under study to increase productivity and economic growth.
The subject is the subject of the largest special study being prepared by the Independent Tax Institution (IFI).
For Felipe Salto, executive director of IFI, Brazil's tax system is very complex and cumbersome, making it difficult for citizens to keep up. product. "IFI does not suggest the menu Nothing prevents people from thinking about the proposed menu."
Historically, rates have been falling since the 1970s and 1980s because of competition from countries for international investment. It was also a way for countries to manage the movement of multinationals to "transfer their profits" into tax havens, which reduces the recovery.
With the international crisis and the need for budgetary adjustments, the countries that adopted this practice, between 2008 and 2015, offsetting the reduction in the tax burden of businesses with the rise in personal income tax, in order not to not generate significant revenue loss.
According to Rodrigo Orair, subject specialist and director of IFI, as of 2016 countries have already solved the fiscal problem and began to worry about economic growth by adopting a policy of slowing more agressive.
Ireland pulled the line letting the tax rate play at 12.5%. And then, several countries announced changes at lower levels. The largest decline was recorded in the United States, which abruptly lowered the corporate income tax rate from 35% to 21% in 2018.
Tax reform
Upon their return, Australia countries are reducing their legal rate. which does not take into account the deductions provided for in the legislation), but at the same time limits certain IR deductions of legal entities, by increasing the incidence base or by conducting a series of tax benefit reviews. According to him, the tax reform of the President of the United States, Donald Trump, reduced the number of deductions that companies could make.
Brazil should follow Trump's policy. "The big question is whether the Paulo Guedes team will compensate in whole or in part by collecting dividends on the individual or by limiting the interest on the capital," Orair said.
The Temer government economic team even came up with a proposal for change, but there was no time to send it to Congress. "The time is up and we did not have the political environment to move this discussion forward, it is now the turn of the next government," said Eduardo Guardia, Minister of Finance. According to him, the proposal would have been presented to the team of Paulo Guedes, his successor in power.
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