Originally published in the September 25 edition of World Tax Daily (Copyrights Tax Analysts – www.taxanalysts.com)
After 13 hours of debate, Brazil’s House of Representatives on September 20 approved in a first vote the extension to December 31, 2011, of the 0.38 percent bank transactions tax (CPMF).
The House will debate and vote on amendments to the CPMF project before putting it to a second vote this week. So far, the only change to the original proposal submitted by the executive branch is the inclusion of a provision that would allow for a CPMF rate reduction and also for reinstatement of the 0.38 percent rate by ordinary law, without the need for a constitutional amendment.
The executive branch will most certainly use that new provision to bargain for approval of the CPMF extension in the Senate, where the required three-fifths majority has not yet been confirmed. Opposition parties have accused the executive branch of “buying” votes in the Senate by encouraging opposition senators to change parties in exchange for political support in future elections.
In the Senate, the CPMF project will be considered by the Commission of Economic Affairs and the Commission of Constitution and Justice before being submitted to the full Senate for two rounds of voting. The project needs 49 favorable votes in each Senate voting session to be approved and to become effective.
David Roberto R. Soares da Silva