Atalho

News

Gasodutos

Income Tax Reform stipulates an additional 1.5% rate for CFEM

06/08/2021

Last Tuesday (08/03/2021), Congressman Celso Sabino (PSDB-PA) submitted an amendment to Bill of Law # 2,337/2021 (2nd phase of Tax Reform), putting forward a 1.5% increase in the Financial Compensation for the Exploration of Mineral Resources (“Compensação Financeira pela Exploração de Recursos Minerais” – CFEM) rate on iron, cooper, bauxite, gold, manganese, kaolin and nickel operations.
 
According to the novel wording, CFEM’s revenues will be fully transferred to the States and Municipalities, and no portion of such revenues will be transferred to the Federal Government. If the Brazilian Congress approves the substitute bill without amendments, the CFEM rate will rise from 4% to 5.5% on operations involving the above-mentioned minerals.
 
In a statement about the new substitute bill, Congressman Celso Sabino argued that since legal entities shall enjoy a corporate income tax (IRPJ) reduction by virtue of such reform, the CFEM rate increase would be a “fair measure”.
 
CFEM’s rate increase and the shift on the distribution of its revenues have been proposed as measures to counterbalance the tax reform impact on States and Municipalities’ finances.
 
However, besides increasing the cost incurred by mining entities, the proposed changes to the CFEM legislation also strike for being alien to the scope of Bill of Law # 2,337/2021, whose subject matter is the corporate income tax reform. Indeed, as already acknowledged by the Brazilian Supreme Court, the CFEM has a royalty  rather than a tax nature, being an “original public revenue” (ADI # 4,606; ADI # 6,233; and RE # 228.800). In this sense, if approved, questions may arise with respect to its constitutionality while introducing CFEM changes.

Share on Social Media
Trench Rossi Watanabe
São Paulo
Rua Arq. Olavo Redig de Campos, 105
31º andar - Edifício EZ Towers
Torre A | O4711-904
São Paulo - SP - Brasil

Rio de Janeiro
Rua Lauro Muller, 116 - Conj. 2802
Ed. Rio Sul Center | 22290-906
Rio de Janeiro - RJ - Brasil

Brasília
Saf/s Quadra 02 - Lote 04 - Sala 203
Ed. Comercial Via Esplanada | 70070-600
Brasília - Distrito Federal - Brasil

Porto alegre
Av. Soledade, 550
Cj. 403 e 404 | 90470-340
Porto Alegre - RS - Brasil

press
JeffreyGroup
Nara Neri 55 11 3185.0800 | Ext.832

Ícone do Instagram
Ícone do Podcast
Ícone do Facebook
Ícone do YouTube
Ícone do Linkedin