Companies spend US$33 billion a year complying with tax regulations in Brazil

RIO DE JANEIRO, BRAZIL – According to the Brazilian Institute of Planning and Taxation (IBPT), each Brazilian company needs to comply with an average of 4,626 tax rules, which include 51,945 articles with 121,033 paragraphs. The institute says that this is the equivalent of 6.5 kilometers of regulations.

“As a result of this amount of rules, companies spend some R$181 (US$33) billion a year to maintain personnel, systems and equipment to monitor changes in regulation,” the IBPT study states.

According to IBPT, the cost is a result of the number of tax rules in Brazil. The institute estimated that 6,782,002 rules have been issued in the country since the enactment of the 1988 Constitution. Taxation accounts for 6.58% of these rules.

IBPT says that 443,236 tax rules have been created over the past 33 years in Brazil and 30,837 were in force on September 30, 2021. It also states that, with these changes in legislation, countless taxes have been created in the country and many have become heavier on the pockets of both Brazilian companies and consumers.

The IBPT study was released amidst discussions on the tax reform. On Tuesday, October 5, Senator Roberto Rocha sbmitted an opinion on the PEC (Proposed Constitutional Amendment) 110 of 2019. The goal is to simplify the Brazilian tax system by merging federal, state and municipal taxes.

Rocha’s opinion has the support of entities such as Comsefaz (National Committee of Finance Secretaries of the States and Federal District) and CNI (National Confederation of Industry). However, mayors are split on the report: the CNM (National Confederation of Municipalities) supports and the FNP (National Front of Mayors) rejects it.

In a note published with the support of some 120 business entities, the FNP said that “the simplification of consumption taxation does not have as a premise the combination of Entities’ taxes or the merger of the incidence bases of goods and services, but rather the tackling of specific issues of the currently existing taxes, particularly the ICMS, the most criticized tax in Brazil, and the non-cumulative PIS/COFINS.”

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