Trade & investment

ICC addresses Brazilian tax issues

  • 10 November 2011
ICC Customs and Taxation

The ICC Commission on Taxation held its first roundtable on Brazilian tax issues in Rio de Janeiro on 21 October.

Organized by business for business, the roundtable addressed a number of issues which continue to create uncertainty regarding the tax environment, including the amount of tax to be paid in Brazil to the many taxing bodies when conducting normal business activities and the numerous and rapid changes in law (many each day). This environment is not conducive to an optimal investment climate for companies in Brazil.

The aim of the gathering was to engage local revenue officials, tax practitioners and opinion leaders to constructively debate tax policy including transfer pricing, taxation of services, VAT issues and administrative burdens.

Brazil has a good overall position (53 out of 142 countries) in the Global Competitiveness Report 2011-2012 from the World Economic Forum. But the country could improve its ranking quickly and significantly by addressing two issues: “burden of government regulations” and the “extent and effect of taxation”. For those two issues, Brazil ranked last out of 142 countries reviewed.

ICC believes that improvements in these areas will slowly but surely happen and will depend largely on the country’s disposition to build a true dialogue between tax authorities and tax payers.

The Chair of the ICC Taxation Commission, Theo Keijzer, said: “The fragmented nature of tax laws in Brazil is a major curse for business, resulting in hundreds of law suits per company. The number is difficult to believe outside of Brazil because it exceeds the imagination anywhere else in the world.” Mr Keijzer also noted that “a willingness by the Brazilian government to discuss issues with representatives of the business community like ICC would be seen globally as a major step forward.”

With more than 60 participants from all over the world, the roundtable was an effective forum to discuss the necessity for Brazil to simplify its tax legislation and better align itself with the international rules.

Concluding the roundtable, Mr Keijzer said he saw “significant potential for a rapid improvement of the tax climate in Brazil without costs to the Brazilian government.”.

“Brazil is a major power in the world and it has to take its place in the global tax landscape. It must show willingness to discuss tax policy issues with the business community to be an attractive investment location in the future. “