PLP 108/2024 approved by the Chamber of Deputies - Check out the bill's main points
On October 30, 2024, the Chamber of Deputies concluded the vote on Complementary Bill (PLP) 108/2024, which regulates part of the Tax Reform and introduces significant changes to the taxation of assets, as well as to inheritance, directly impacting the ITCMD (Causa Mortis and Donation Transfer Tax) and the ITBI (Real Estate Transfer Tax).
The approval of the substitute text by the plenary, with the incorporation of amendments suggested by various members of parliament, represents a step forward in the regulation of tax reform. The approved text will now be sent to the Federal Senate.
Main Changes Approved in PLP 108/2024
1. establishment of the IBS Management Committee (CG-IBS):
The bill establishes the CG-IBS, the body responsible for regulating the application and distribution of IBS collection among the states, municipalities and the Federal District. The IBS, which is shared between the states and municipalities, will replace the ICMS and ISS, promoting greater uniformity in collection.
2. ITCMD rules:
PLP 108/2024 also considers transfers between related persons to be a donation for the purposes of ITCMD:
- The forgiveness of debt by liberality and without justifiable business justification; and
- The transfer declared as onerous to a person who does not have the financial capacity to acquire it as a purchase and sale.
In the cases in question, a related person is considered to be (a) a spouse, partner or relative, by blood or affinity, up to the third degree; (b) a legal entity whose director or manager is a spouse, partner or relative, by blood or affinity, up to the third degree, of a successor or donee; or (c) a legal entity with an individual who is a partner, owner or shareholder.
In addition, the bill establishes that in successive donations between the same donor and donee, the ITCMD will be recalculated with each new donation. This calculation will include the accumulated value of previous donations, deducting the tax already paid and applying the progressive rate based on the total donated in the period defined by local legislation.
We would also like to point out that the bill sent to the Senate had some significant exclusions:
- Disproportionate Distribution of Dividends: The text excludes the levy of ITCMD on the disproportionate distribution of profits and dividends between partners, disproportionate spin-offs and the increase or reduction of capital at different prices, involving related persons.
- Private pension plans (PGBL and VGBL): Supplementary pension plans such as PGBL and VGBL have also been excluded from the ITCMD levy, ensuring that these retirement planning instruments are not burdened by additional taxes.
Currently, case law has ruled out the levying of ITCMD on VGBLs on the grounds that such taxation would be unconstitutional. The discussion is awaiting final judgment by the STF (Theme 1.214), at which time the incidence of ITCMD on PGBL will also be analyzed.
3. Digital platforms:
The approved wording clarified that intermediary digital platforms are not liable for violations related to IBS and CBS, as long as they comply with the obligations to withhold and pay the taxes due.
Although this responsibility was not expressly provided for in the original text of the bill, there was concern that there could be an interpretation that would make this sector responsible.
In order to clarify this issue, new wording has been added exempting "digital intermediation platforms that have withheld and paid the IBS and CBS and comply with the ancillary tax obligations applicable to the transactions they are intermediating".
4. Transfer of ICMS Credit Balance:
Another significant change is the expansion of the possibilities for transferring the ICMS credit balance. The new text allows credit to be transferred between companies in the same economic group.
In addition, ICMS credits can be used to offset IBS amounts during the transition period. In this case, the State and Federal District will have up to 30 days after approval to inform the IBS Management Committee of the amount of the approved credit balance, the identification of the holder and the date on which the offsetting was completed.
5. Fines and Fiscal Representation for Criminal Purposes:
The approved text excludes the imposition of fines and the possibility of tax representation for criminal purposes in cases where the administrative process is resolved in favor of the tax authorities by a tie-breaker, provided that the taxpayer expresses his intention to pay within 90 days.
6. Highlights and Rejected Proposals
Some proposals were rejected during the discussions on PLP 108/2024, including:
- Tax on Large Fortunes (IGF): Proposed by Congresswoman Erika Hilton (PSOL-SP), the creation of the IGF, which would tax assets in excess of R$10 million, was rejected. The tax was considered by some parliamentarians to be a measure of social justice, but met with resistance due to its impact on large estates and possible effects on the economy.
- Five-year evaluation of tax benefits: Another rejected amendment sought to exclude the obligation for the CG-IBS to evaluate the efficiency and effectiveness of tax benefits every five years. The basic text maintained this obligation, reinforcing the need for periodic evaluation of the impacts and quality of social and economic development policies financed by tax breaks.
7. News on ITBI Prepayment
PLP 108/2024 also proposes significant changes to ITBI. Traditionally, the tax is paid when the property is registered, but the new proposal allows for the optional advance payment when the respective translative title is formalized, i.e. the public deed or private document with the force of a public deed.
In addition, municipalities will be able to offer a reduced rate to those who opt for this in advance.
8. Next steps in the Senate
With its approval by the Chamber of Deputies, PLP 108/2024 will now be analyzed by the Federal Senate. The bill may undergo adjustments in the Senate, and there is no forecast for the start of this process.
The government expects the bill to be approved in the second half of 2024 and, if approved this year, the new rules will only come into force in 2025 (observing the annual and nonagesimal anteriority for ITCMD and ITBI).
These changes require attention and planning on the part of taxpayers to adapt their private pension and real estate acquisition strategies to the new tax rules. The tax reform aims to bring more clarity and efficiency to taxation, avoiding practices such as "drawer contracts" and tax evasion in inheritance. Staying informed and adjusting your financial and succession planning will be essential in order to take advantage of the best conditions under the new regime.
BTLAW, through its Tax Consultancy division, has a team prepared and experienced to provide additional information on this subject.
For more details, please contact us: tributarioconsultivo@btlaw.com.br.
