ICMS and the Institute of Tax Replacement in Brazil

Abstract

Brazil has a wide range of collection means used by the State, in addition to a high tax burden. One of the types of taxes is the so-called Tax on Circulation of Goods and Provision of Interstate and Intermunicipal Transport and Communication Services (ICMS). This article aims to discuss the system used by current legislation regarding the Tax Replacement Institute (ICMS). Uses specific rates for each state, which are defined in advance by the Federal Senate. Brazilian law provides that the ICMS is collected in advance in relation to a certain future taxable event, through Tax Replacement, thus avoiding any type of evasion before the agents of the transaction. This is an exploratory work, with a qualitative approach, with a bibliographic focus, with the use of doctrines, legislation and also consultation of jurisprudence on the subject. This article intends to discuss about the guarantee of collection by the States, since the bureaucracy involved and the cost to the final consumer are considerable aspects and influence when observing the cost-benefit for the Union. Finally, it is concluded that, despite being complex and time-consuming for both parties to the transaction, the Tax Replacement Institute is largely advantageous for the State with regard to the amount collected, and security due to the non-occurrence of tax evasion, in the same way, conflicts arising from the collection need an agile solution to ensure the fluency of the business itself.