For Braga, new model with “split payment” can lower the standard reform rate

The central issue that dominated the debate at the fifth hearing of the Constitution and Justice Commission (CCJ), on Tuesday (12), was the innovation of the “split payment” that will be adopted in the new tax model on consumption, regulated by the draft complementary law (PLP 68/2024), under discussion in the Senate.

The rapporteur, senator Eduardo Braga (MDB-AM)said that the expectation with the new mechanism is a “brutal” reduction in tax evasion, which is high with losses ranging between 8% and 20% of tax revenue, but without having a “safe” value until today.

Braga also mentioned the effect that split payment should have on reducing fraud. The consequence of this, according to him, could be to lower the standard rate – the one that will be charged on the consumption of all items that are not included in the “special rules” of the tax reform.

“We will have a single command and a single system with electronic invoices and a monitoring system that, in the super intelligent phase, will be in real time. Therefore, fraud will be increasingly reduced, tending towards zero. These two variables will bring a great benefit in reducing the standard tax rate in the country”, assessed Braga.

Feasibility

All audience participants praised the “split payment”, which modernizes the tax system, making it more efficient and fair. The mechanism refers to split payment, in which the amount paid by a buyer is automatically divided between the seller and tax authorities at the time of the transaction.

This system is used to ensure that the portion corresponding to taxes is directly allocated to the government, reducing the possibility of tax evasion and improving the efficiency of tax collection.

Despite being considered a complex change in relation to the current model, all technical studies have shown its viability. The director of the Extraordinary Secretariat for Tax Reform of the Ministry of Finance, Daniel Loria, informed, in response to questions from those present and virtual participants in the hearing, that as early as 2026 there could be a pilot project to test the mechanism, which could then enter in operation in 2027.

Loria added that there is a working group studying the specifics of applying the mechanism in various activities.

He stated that the new tax model with mechanisms such as “split payment” will increase economic productivity.

“We are going to rationalize the entire organization of Brazilian economic activity, from the logistics network to the organization of the companies’ own operations, verticalization versus outsourcing. Ultimately, there are a series of factors that tax reform will greatly help the productivity of the economy”, he argued.

Simple

The director of the Extraordinary Secretariat for Tax Reform praised the quality of the questions from the virtual participants. One of them was about Simples. He said that the system will be advantageous for those who are on Simples and sell to companies, since the “split payment” allows automatic credit to the purchasing company in the transaction. He also added that there will be no impact on importers, who, according to him, will follow the same rules applied to local sales.

Another participant in the hearing was the former president of the Chamber of Deputies Rodrigo Maia, representing the National Confederation of Financial Institutions (CNF). He was optimistic about the new mechanism and confident that it will be successfully implemented.

“We are betting that we will fulfill the role and we have a lot of technology, a lot of qualified people to collaborate with the government so that the split payment actually ends with evasion, fraud, and is an automatic model, so that the credit can be returned in a faster”, said the former deputy.

Maia and other representatives of financial institutions, present at the hearing, said that they are speaking with Senator Braga’s technical team and with the director of the Ministry of Finance to promote the necessary adjustments that guarantee equality between the various financial market products and that the The option to tax the spread does not result in distortions.

Present at the CCJ debate, the deputy Luiz Carlos Hauly (Podemos-PR)who became an expert on the subject, stated that the reform will reduce prices for the end consumer.

“When you end the fiscal war, with the incentives ending, there will be a reduction in the total burden of 3.5% of GDP, plus defaults, another 2% of GDP and another 1% of bureaucratic costs, around just over 6% of GDP”, estimated Hauly, as a contribution that the new model can provide.

Contribution

Eduardo Braga said that Brazil has an advanced system with electronic invoices, in addition to a sophisticated banking system that allowed the implementation of Pix.

“At that time, it also seemed like something extremely innovative, challenging in the way it was implemented and successful. (That) It excites us and encourages everyone to believe that our technicians, our capacity in revenue from different spheres, municipal, state, federal, will be capable of implementing this system and this ‘split payment’ model”, stated the senator.

According to him, the mechanism will have up to three days to share the payment with the tax payer, taking a maximum of 60 days to complete the entire tax credit payment system in the country.

This hearing is part of the cycle of eleven suggested by the rapporteur and approved by the CCJ to discuss the first tax reform regulation project.

(With Agência Senado)

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