The Tax Reform, recently approved by the House of Representatives, will lead to a deep change in the national tax system, which has been long discussed by several economic sectors. However, so far, the impacts of this reform on foreign trade taxation, especially on special customs regimes, have received insufficient attention.
The Amendment Proposal to the Constitution No. 45/2019 (PEC No. 45/2019) has the simplification of the tax system as one of its pillars, with the standardization of taxes on consumption among the various sectors of the economy and a substantial reduction of tax incentives.
The proposal is to unify federal, state and municipal taxation on consumption of goods and services in two new non-cumulative taxes: the Tax on Goods and Services (Imposto sobre Bens e Serviços- IBS) and the Contribution on Goods and Services (Contribuição sobre Bens e Serviços - CBS).
The proposed art. 156-A, §1, item X, regarding the IBS - also applicable to the CBS, in accordance with art. 195, §15 - establishes that these taxes will not be subject to the granting of financial or tax incentives and benefits or specific, differentiated, or favored taxation regimes, except for the ones established under the Constitution itself.
Item IX of paragraph 5 of the same article establishes some exceptions regarding foreign trade operations, assigning the Complementary Law to regulate "the hypotheses of tax deferral applicable to special customs regimes and export processing zones".
Wisely, the PEC recognized the particularity of foreign trade operations, which often requires regimes with specific taxation and other tax benefits - sometimes, granted internationally. However, the wording adopted raises doubts about the scope of this exception and, therefore, on the impacts of the reform for the import and export regimes existing in the Brazilian territory nowadays.
The first doubt concerns the very definition of "special customs regimes", since the Federal Constitution does not mention the expression elsewhere.
Decree-Law 37/1966, which regulates import tax (not covered by the reform) and customs services, reserves Title III to special customs regimes, but does not define its concept. From its general provisions (art. 71), one can only extract that it involves the suspension of import tax, granted under certain conditions (to be provided by regulation) and for a fixed period of, generally, up to one year.
The Mercosur Customs Code, approved by Legislative Decree No. 149/2018, pending ratification by other members of the bloc, defines special customs regimes as "specific regulations, within a customs regime, which allow the entry, movement into or out of the customs territory of goods, means of transport and cargo units, without payment or with partial payment of customs duties and subject to simplified customs clearance, due to the nature of the declarant and of the goods, and the form of shipment or the destination" (Art. 100).
But can the infra-constitutional legislation define the scope of the expression and, therefore, the breadth of the exception provided by PEC No. 45/2019? And is it sufficient that a regime related to foreign trade is named as a special customs regime to fall within the exception of art. 156-A, §5, item IX?
The nomenclature given by the law does not change the nature of each legal institute, so there is no point in calling a special customs regime what it is not one. Likewise, the Constitution cannot be interpreted from infra-constitutional legislation, violating the hierarchy of norms. The Constitution will give validity to the complementary law of the IBS and CBS, and not the other way around.
Nevertheless, the issue gains a complex outline, considering there is no constitutional definition of a special customs regime nowadays. In fact, there is not even a legal definition, so it will be up to the operator of the Law to develop this meaning from an interpretative process, which tends to increase litigation.
The enactment of PEC No. 45/2019 will introduce a constitutional concept of a special customs regime that will require the analysis of the context of its creation for the purpose of delimiting its meaning. This analysis involves, among other aspects, the examination of the consistency in terminology, which will give some flexibility to the interpretation of the Constitution according to the infra-constitutional legislation. That is because several terms and expressions used in the constitutional text can only be properly understood if the interpreter analyzes the linguistic meaning used at the infra-constitutional level.
This is where it becomes crucial to examine the infra-constitutional legislation that currently uses the expression “special customs regimes”.
In this context, there are some regimes that should undoubtedly be classified as special customs regimes. These are the classic examples provided both in Brazilian legislation and in that of other countries and international agreements. However, there are other cases that are in a grayer area, either because of their sectoral nature or because they are not called special customs regimes in the legislation.
Among the most conventional regimes, we can mention customs transit and temporary admission. In the first one, a good is allowed to enter the country with the suspension of taxes for (i) passage through the national territory and subsequent exportation; or (ii) for its transportation, under customs control, to another bonded warehouse in the Brazilian territory (usually a dry port) to be subjected to customs clearance of importation. It is, therefore, a regime closely linked to the freedom of transit of goods and means of transport, provided for in international conventions, and to the infrastructure created for Brazilian foreign trade, consisting of ports, airports, land border points, and enclosures located within the national territory - the so-called dry ports or customs industrial logistics centers, created precisely to relieve the rest of the structure.
Temporary admission, on the other hand, allows a good to enter the country, for a given period, with total or partial suspension of taxes due upon importation, for subsequent exportation of the goods in the same state or after its processing. It is a fundamental regime for international cultural, sports, scientific, educational, commercial or industrial exhibitions, competitions and samples, entry of foreign vehicles carrying goods and passengers, and even containers.
In the group of sectorial benefits, there are special customs regimes, called as so by the Brazilian legislation, notably by Decree-Law No. 37/1966 and Decree No. 6,759/2009 (Customs Regulation), which are specific to the national legislation and are intended to serve specific sectors of the economy. Among them, the REPETRO is intended for the oil and gas sector; the REPEX is destined for the import for subsequent export of crude oil and derivatives; and the REPORTO is destined for the port sector (and expected to be extinguished at the end of 2023).
Regarding the benefits applied in import operations, but not called special customs regimes, there are scenarios of non-incidence or tax exemptions that replicate the import tax provisions. These include the hypotheses of non-encumbrance of goods for replacement, samples without commercial value, luggage of travelers residing in the country, and subsistence border trade, among others. Under this category, one can also include the Simplified Taxation Regime (RTS) and the Special Taxation Regime (RTE), intended, respectively, for international shipments and for goods purchased by travelers abroad, which provide for the collection of an increased rate of import tax, with the exemption or zero rates of other taxes due upon importation (IPI and PIS/Cofins-Import).
Finally, there are benefits that allow for the acquisition of imported and domestic goods with the exemption of only some of the taxes due on import, linked to the characteristic of the product, economic activity of the company, purpose of the good, etc. Amongst these benefits, one can include those related to preponderantly exporting companies (e.g. RECAP, REPES, art. 40 of Law 10.865/04) and the special incentive regime for infrastructure development (REIDI).
All of the abovementioned regimes provide benefits for importing or exporting goods, but they are mechanisms with distinct characteristics and different nomenclatures in the infra-constitutional legislation.
Given this multiplicity of regimes, the text proposed by PEC 45/2019 brings few answers - not to say complete insecurity - about the possibility of implementing or maintaining the benefits, regimes, and differentiated treatments that exist today for foreign trade operations. As consequence, new judicial discussions and even a proliferation of these regimes may arise. One main concern relates to the potential creation of new regimes that contemplate the acquisition of imported and domestic goods, as a way to escape the prohibition on granting tax benefits of art. 156-A, §1, item X.
Having overcome the issue above, a second problem arises. The text of the PEC mentions only deferral of the tax or contribution.
This is a problematic restriction, detached from the best technique. First, because the expression “deferral” can imply an exemption, a “backward” tax substitution or simply a postponement of the tax payment. In addition, most special customs regimes establish hypotheses of suspension, sometimes followed by exemption (or zero tax rate), when certain conditions are fulfilled.
It is imperative that the wording used in PEC 45/2019 is enhanced to contemplate this aspect of special customs regimes. Note that it is enough to replace the expression “deferral” by “suspension”, which was the previous wording of the PEC, since, in specific regimes, there is an immediate application of exemption or zero tax rate. It is necessary to adopt a more comprehensive wording, which adequately contemplates the various existing regimes, or to simply delete the first part of item X, so that the complementary law provides for special customs regimes, so the prohibition of granting tax benefits provided for in art. 156-A, §1, item X does not apply to them.
Finally, it should be noted that the reform will also have a positive impact on customs regimes, due to the standardization between state and federal taxes, in the form of the IBS and CBS. Today, state legislation often does not accurately reflect the federal rules on special customs regimes, limiting or not even allowing the use of these regimes for ICMS purposes. With the standardization of the taxable event and hypotheses of exemption and immunity of CBS and IBS, it is expected that such restrictions are eliminated, which will improve the use of those regimes by Brazilian operators and reduce litigation.
As shown, the impacts of the tax reform on foreign trade operations are relevant and bring benefits and doubts. Part of these issues may be clarified - and should be covered - when the Complementary Law is issued, but there are some attention points in the constitutional text itself that deserve further debate.