In 2032, ISS, ICMS, PIS and Cofins will cease to exist. The tax reform on consumption inaugurates a new model based on dual VAT, composed of CBS and IBS, promoting the most profound transformation of consumption taxation in the country's history.
This change creates an opportunity that goes beyond simplifying the tax system. It offers the chance to face one of the biggest obstacles to the Brazilian business environment: the gigantic stock of tax litigation accumulated over the last few decades.
The question that arises is simple: does it make sense that, in 2040, administrative courts, the STJ (Superior Court of Justice) and the STF (Supreme Federal Court) are still deciding controversies about the calculation basis of PIS and Cofins, the criteria for crediting these contributions or the municipality competent to demand the ISS?
Although some of these discussions will inevitably continue for a few years, it seems unreasonable for the State to continue mobilizing time, resources and structure to resolve disputes related to taxes that will no longer exist.
The transition to the new system opens a unique institutional window to end this cycle. If there will be a new consumption taxation model, there should also be an extraordinary mechanism to settle the liabilities of the model that will be extinguished. In this context, the idea of a large National Refis focused exclusively on taxes replaced by tax reform is gaining strength.
This is not about reissuing installment programs designed just to increase short-term revenue. The logic would be different. The objective would be to reduce the backlog of litigation, accelerate the recovery of public credits, restore fiscal regularity to companies and allow the Judiciary and administrative courts to focus their efforts on controversies under the new system.
For a program of this nature to achieve widespread support, it would be necessary to offer truly exceptional conditions. The full amnesty of fines would be one of the pillars. It would also make sense to allow the use of tax losses, net and certain tax credits and federal, state and municipal court orders to amortize debts.
The reduction in interest rates also deserves reflection. In an environment of historically high rates, many tax debts become practically unpayable a few years after their constitution, making both the recovery of public credit and taxpayer regularization difficult.
Furthermore, it would be essential to ensure that the discounts granted under the program were not subsequently taxed, as occurred in previous experiences.
This proposal does not replace the tax transaction, an institute that represents one of the most important recent developments in the Brazilian tax system. On the contrary, both instruments have different purposes and can coexist.
The transaction is constructed on a case-by-case basis, considering the debt profile and the taxpayer's ability to pay. This is a sophisticated procedure, which demands intense technical work from prosecutors and companies and which, furthermore, is not yet fully available in all states and municipalities.
A Reform Refis would have a different nature: it would be an exceptional, broad and temporary mechanism, designed to definitively end disputes related to taxes that will no longer exist.
The federal government has already demonstrated, with Desenrola, that extraordinary renegotiation programs can produce relevant results when inserted into a well-defined public policy. Tax reform offers a similar opportunity, now focused on corporate tax liabilities.
The potential gains would be significant for everyone involved. The Union, states and municipalities could anticipate revenues whose recovery, through judicial means, would take many years or perhaps never occur.
The Judiciary and administrative courts would significantly reduce their caseload, freeing up capacity to face the interpretive challenges that will certainly arise with the implementation of CBS and IBS.
Companies would regain their fiscal regularity, expanding access to credit, public tenders and investments, with positive effects on the country's economic activity and competitiveness.
The possibility of using court orders and accumulated tax credits will also contribute to reducing the liabilities of public entities and offering solutions to historical problems, such as accumulated credits from exporters, which have compromised the competitiveness of the Brazilian economy for decades.
Naturally, an initiative of this size will require solid legal construction and fiscal responsibility. Its implementation through a Proposed Amendment to the Constitution seems to be the safest way to provide stability to the program and reduce future questions. It will also be essential to make the measure compatible with public finance rules and carefully evaluate its budgetary impacts for the different federative entities.
Tax reform was designed to reorganize the future of consumption taxation. It now remains to face his legacy. A Refis designed specifically to end the dispute over taxes that will be extinguished can represent not only an important source of revenue, but a framework for institutional rationalization.
By allowing the country to end disputes over the previous system and focus its efforts on consolidating the new model, the initiative will strengthen legal security, reduce costs for the State, improve the business environment and complete, in a coherent manner, the transition inaugurated by the tax reform itself.
