Brazil ICMS VAT disputes restart
- 8 August 2014 | Richard Asquith
The provisional settlement of intra-state Brazilian ICMS (VAT) between states has broken down again as Sao Paulo challenges at the Supreme Federal Court changes raised by other states.
Sao Paulo issued legal proceedings at the end of last month against: Maranhão; Minas Gerais; Mato Grosso do Sul; Pernambuco; Santa Catarina; and Tocantins. It claims that these states in various ways granted companies unfair tax credits without the required consent of the Council of Finance Policy CONFAZ. This, claims Sao Paulo, gives unfair tax advantages to the other states. Benefits include introducing many new deductions and credits for ICMS calculations.
Brazil has possibly the most complex VAT regime in the world. Aside from a wide range of taxing jurisdictions, the states can impose many overlapping taxes.