Lawyers consider tax reform in tourism

Approved by the House of Representatives in July this year, the PEC (Proposed Amendment to the Constitution), which deals with tax reform Facing reservations in the tourism sector Until it is fully evaluated by the Senate, it may be subject to some re-evaluation. Some of these considerations and requests for change are addressed by lawyers Bruno Cacao Ribeiro (from the Accommodation and Tourism Area) and Raffaella Laura Franceschito (from the Tax Advisory Area), from Vas Adfojados, in their latest article.

Experts argue about the need to define the activity to tax accordingly and analyze the travel sector specifically. Check out the text below

Brazilian tourism in tax reform

In Brazil, the tourism sector represents 7.8% of the national GDP and is expected to generate R$752.3 billion this year, generating more than 7.9 million jobs. Therefore, experts and actors in the sector are now discussing the proposed amendment to the Constitution No. 45/2019, also known as “tax reform”, which should treat players in the sector differently.

The text was approved by the House of Representatives and is now in the legislative process for consideration by the Federal Senate. In general, the PEC sets out the possibility of implementing, through a future supplementary law, differentiated regulations for hotel activities, bars and restaurants, theme parks and regional aviation.

However, airlines (except regional), travel agencies, exhibition and event organizers and private transport are not included in this list. If the approved provision is maintained, these players will be subject to the standard system of contribution on goods and services (CBS) and tax on goods and services (IBS).

The concern arises from the unpredictability of the tax burden to which these actors will be subject. On August 8, the Ministry of Finance’s Communications Department issued an explanatory memorandum detailing a little more of what to expect from the standard rates that will be applied in the proposed new tax model, which could reach 27%, when VAT is implemented. (Value added tax) Tourism in other countries does not exceed 10%.

In Germany, the general VAT is 19% and the tourist VAT is 7%. In China, the general VAT is 13%, and the tourism VAT rates are 0%, 6% and 9%. In Spain and Italy, the general VAT is 21% and 22% respectively, and the tourist VAT is 10% – the same as in France. In the UK there is no duty on tourist VAT, while in Thailand the rate is zero.

Until the text is considered in the Senate No. 45/2019, benefit from the zero-rate reduction established in the Juvenile Sector Emergency Resumption Program (PERS), stipulated in Law No. 14148 of May 3, 2021.

It should be noted that Law 14.148/21 was recently amended by Law 14.592/23, which reduced the list of activities within the National Classification of Economic Activities (CNAES) from 88 beneficiaries to only 43.

In the tourism sector, the following CNAES remained the beneficiaries of Persian: Passenger transportation service – car rental with driver (4923-0/02); Mass passenger road transport, under charter, municipal (4929-9/01); Mass passenger road transportation, by charter, intercity, interstate and international (4929-9/02); Organizing trips on municipal road vehicles (4929-9/03); Organization of trips by private road vehicles, intercity, interstate and international (4929-9/04); Marine Transport by Navigation – Passengers (5011-4/02); Long Distance Sea Transport – Passengers (5012-2/02); Water transportation for sightseeing tours (5099-8/01); Restaurants and the like (5611-2/01); Bars and other establishments specializing in the serving of drinks without entertainment (5611-2/04); Bars and other establishments specializing in the provision of drinks and entertainment (5611-2/05); Travel Agencies (7911-2/00); Tour Operators (7912-1/00); Museum activities and exploration of historical places, buildings and similar tourist attractions (9102-3/01); Activities of botanical gardens, zoos, national parks, ecological reserves and environmental protection areas (9103-1/00); Amusement parks and theme parks (9321-2/00); Activities of collective organizations related to culture and art (9493-6/00).

It is noted that the unjustified discrimination created between the players in the tourism sector in the Egyptian General Tourism Company contradicts the national tourism policy itself established by Law No. 11771/2008. According to her, “(1) Accommodation facilities; (2) Tourism agencies; (3) Tourist transportation companies; (4) Event organizers; (5) Parks; and (6) Tourist camps, are all members of the same important chain in their own right.” Without interference.”

Hopefully the federal Senate will understand that what is at stake is not just another commercial interest; Differences in treatment between players in the sector may cause disruption in the chain. We look forward to a strategic decision that will make Brazil a more competitive destination, increase consumption and generate more jobs and opportunities.