Rio companies ask Pezão to revoke reduction in tax benefits

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The Federation of Industries of the State of Rio de Janeiro (Firjan) asked the Rio de Janeiro government to revoke Decree 46,208/2017, which reduced tax incentives by up to 50%. The rule, which has been in force since January 1st, reduces the benefits of sectors such as pharmaceuticals, fish, IT, plastics and meat, among others.


When publishing the decree, the governor of Rio, Luiz Fernando Pezão (PMDB), claimed that the state needs to meet the requirements of the Fiscal Recovery Regime. Created by Complementary Law 159/2017, the Union's aid program for states requires the reduction of tax benefits that result in revenue waivers by at least 10% per year.

However, Firjan considers it “serious” that the Rio government has decided to reduce tax benefits by up to 50%. In a letter sent to Pezão, the entity argues that the measure will have a negative impact on companies in the region, with a decrease in competitiveness and an increase in legal uncertainty, in addition to hindering the resumption of Rio's economic recovery.

In the document, the federation asks for the B2B Lead decree to be revoked and, at least, for the 90-day period required by legislation to be observed when there is an increase in the tax burden so that companies can adapt to this new reality.

According to the entity's tax and fiscal legal coordinator, Priscila Sakalem , Rio de Janeiro could comply with the Fiscal Recovery Regime by reducing tax incentives to the minimum level of 10% — something the state had already done before joining the program, when it introduced the State Fiscal Balance Fund (Feef) by Law 7,428/2016.

Especially because LC 159/2017, points out Priscila, excludes from that percentage benefits that were granted for a fixed period and according to certain conditions and those validated by the National Council for Financial Policy (Confaz).

More revenue
With the economic crisis and the consequent drop in revenue, Rio spent the entire 2016 delaying civil servants' salaries. Furthermore, public services were affected — there was a lack of basic materials in hospitals in Rio de Janeiro, Military Police vehicles stopped circulating due to lack of repairs and students at the State University of Rio de Janeiro practically lost the year.



For Priscila Sakalem, tax benefits help increase revenue.
reproduction
To increase revenue, the state of Rio, in addition to reducing tax benefits, increased 100% of the additional ICMS for the State Fund to Combat Poverty and Social Inequalities (Fecp). This measure, together with the implementation of Feef, could raise R$2.6 billion for public coffers.