Download PIS/COFINS and IPI

Programa EUROsociAL Fiscalidade
Estratégias Fiscais Ligadas à Coesão Social
Encontro de Especialistas em Política Tributára – Receita Federal e União Européia
PIS/COFINS and IPI
The Federal Consumption Taxes
Jefferson José Rodrigues
Chief of Economics Studies
Secretaria da Receita Federal
Brasília – Brazil
November 20-23, 2006
General Aspects
Brazilian Tax System
Consumption
ƒ
Federal
IPI
PIS/Cofins
Cide Comb.
ƒ
Income
ƒ
Federal
IRPF
IRPJ
CSLL
Social Sec.
ƒ
Federal
ƒ
INSS
Others
Federal
Rural
ƒ
State
Vehicle
State
ƒ
ICMS
ƒ
Property
Local
Urban
Local
ISS
% GDP
16.4
8.1
6.9
1.0
5.0
% Tax Burden
44.0
21.6
18.4
2.8
13.2
Receita Federal
PIS/COFINS
Brief history
9 The Social Integration Program (PIS) was created in 1970 and had
incidence on company's turnover at the rate of 0.65%.
9 The Contribution for the Financing of Social Security (Cofins) was
created in 1982 and had incidence on company's turnover at the
rate of 0.5%. Gradually, the rate was increased until achieving 3%, in
1999.
9 Along the years, there was a trend to converge the tax bases of the
two contributions. Consequently, nowadays the tax rates are almost
a simple addition.
Receita Federal
PIS/COFINS
Features until 2003
9 Until 2003, the PIS/Cofins were contributions with incidence on
company's turnover.
9 The incidence was cumulative at total rate of 3.65%, with no
incidence on imports and exports.
9 The financial sector was charged at the rate of 4.65% on the spread
(the difference between the financial revenues and the interest rate
a bank pays on deposits).
9 There were few exemptions, and some economic activities were
charge in a single stage.
Receita Federal
PIS/COFINS
Features after 2004
9 Under the present rules, PIS/Cofins are hybrid contributions: for some
economic activities, they are cumulative at total rate of 3.65%. For
others, they are non-cumulative at total rate of 9.25%.
9 When they are non-cumulative, the tax basis is the difference
between gross revenue and total deductible purchases.
9 Imports are charge at total rate of 9.25% and exports are exempt.
9 The financial sector is still charged at the rate of 4.65% on the spread
(the difference between the financial revenues and the interest rate
a bank pays on deposits).
Receita Federal
PIS/COFINS
Features after 2004
9 There are some exemptions, like capital goods and basic foods .
There are more economic activities charged in a single stage.
9 In some cases, the buyer of a service must withhold at source the
PIS/Cofins
9 The collection of PIS/Cofins is not shared with States and
Municipalities.
9 The collection is directed to financing the social security system
(health care, pension system and social assistance).
Receita Federal
PIS/COFINS
PIS/Cofins Collection *
6,0%
Tax Collection (% of GDP)
5,0%
4,0%
1.65%
(1983)
3,0%
5.40%
(2005)
2,0%
1,0%
* Pasep included.
0,0%
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Receita Federal
PIS/COFINS
PIS/Cofins Collection *
40%
35%
% of Consumption Collection
Relative Share (%)
30%
25%
20%
15%
% of Federal Revenue Taxes
10%
5%
* Pasep included.
0%
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Receita Federal
IPI
Basic features
9 The Tax on Industrialized Products (IPI) replaced, in 1967, the federal
consumption tax.
9 The IPI is a value-added tax only charged on the manufacturing
stages (it is not charged on services).
9 The rates are defined under the harmonized system (several different
brackets).
9 According to a constitutional rule, the IPI shall be selective, based on
the essentiality of the product.
9 The highest brackets are levied on tobacco, alcoholic drinks, vehicles
and luxury goods.
Receita Federal
IPI
Basic features
9 Is levied on imports and is not levied on exports.
9 57% of the collection is shared with States and Municipalities.
9 In the last few years, there has been a gradual exemption of capital
goods.
9 It is an important tool of industrial policy of the federal government.
The brackets may be changed by the executive power.
9 There are many programs of regional development based on the
exemption of IPI (e.g. Zona Franca de Manaus).
Receita Federal
IPI
IPI Collection
3,0%
Tax Collection (% of GDP)
2,5%
2,0%
2.52%
(1983)
1,5%
1,0%
1.29%
0,5%
(2005)
0,0%
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Receita Federal
IPI
IPI Collection
30%
% of Consumption Collection
Relative Share (%)
25%
20%
15%
10%
% of Federal Revenue Taxes
5%
0%
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Receita Federal
PIS/COFINS + IPI
Tax Collection
8,0%
Tax Collection (% of GDP)
7,0%
6,0%
4.18%
(1983)
5,0%
4,0%
3,0%
6.70%
(2005)
2,0%
1,0%
0,0%
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Receita Federal
PIS/COFINS + IPI
PIS/Cofins + IPI Collection *
50%
45%
% of Consumption Collection
Relative Share (%)
40%
35%
30%
25%
20%
15%
% of Federal Revenue Taxes
10%
5%
* Pasep included.
0%
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Receita Federal
CIDE - Combustíveis
Basic features
9 The Economic Contribution on Fuel (CIDE Combustíveis) replaced, in
2002, a non-tax government revenue that was charged on fossil fuel
and directed to a fund used do balance changes in the international
price of oil.
9 It is charged in the refinery. The tax rate is specific (a fixed amount
per liter of fuel).
9 The amount of the specific contribution is variable, according to the
type of fuel.
Receita Federal
CIDE Combustíveis
Tax Collection
0,6%
Tax Collection (% of GDP)
0,5%
0.56%
(2002)
0,4%
0,3%
0,2%
0.39%
(2005)
0,1%
0,0%
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Receita Federal
Programa EUROsociAL Fiscalidade
Estratégias Fiscais Ligadas à Coesão Social
Encontro de Especialistas em Política Tributára – Receita Federal e União Européia
PIS/COFINS and IPI
The Federal Consumption Taxes
Jefferson José Rodrigues
Chief of Economics Studies
Secretaria da Receita Federal
Brasília – Brazil
November 20-23, 2006