Fiscal Benefits in the State of Minas Gerais
Paulo Machado (Lawyer of Tax Law Team)
On April 2nd of this year, the State of Minas Gerais, by enacting Decrees No. 45,946 and No. 45,947, has added to the ICMS tax law, provisions granting tax benefits to taxpayers. These benefits range from debt relief to rate reduction and tax exemption on certain products. Below are the main provisions of each of these decrees.
Decree No. 45,946
Provides for the reduction of the ICMS rate for fuel industries, civil construction and electronics, in a retroactive manner to January 1st, 2012.
In addition to reducing the tax rate for certain industries, the decree also provides for a tax exemption over some raw materials (sand, gravel, bricks, cement concrete or asphalt to be used in public works for maintenance or repair of federal State highways etc.) used by real estate developers and construction companies. We also note that it is possible that the government authorizes that such tax exemptions do not affect ICMS credits for product that leave the State, which may remain intact, as there was no exemption at all.
Besides, said Decree also contains a provision that may raise the tax burden for the sectors that suffer from the levy of taxes on the sale of standardized or shelf computer programs. Until then, taxation was levied only on the physical support (twice its value for the case of shelf software). Said rule, which determined that the basis of calculation of physical support for the shelf software is twice the value, was revoked. Therefore, there is an omission on how this will be applied in the commercialization of such products. It is also worth mentioning that this change will be effective only from January 2013.
Concerns the forgiveness (remission) of debts included in active debt roster until the October 31st, 2011, with amounts to $ 5,000.00 (five thousand reais) or less, whether or not there is a lawsuit filed for its recovery. In the case of a lawsuit arguing the tax debt against the State, the taxpayer must withdraw it and expressly waive the right on which his/her claims are based, to be then entitled to enjoy said benefit. Forgiveness is only for amounts not yet settled (tax credit consisting only of a separate fine, ongoing parceling remaining balance, and judicial costs and attorneys’ fees relating to legal proceedings) and cannot be used to request compensation or refund of ICMS already collected. The update of the tax debts should be done based on the updated value until December 28th, 2011, by Administrative Tax Process – PTA.