Outsourcing should not serve as tax dodge, finance minister says

Outsourcing is only an option if it does not cause losses in tax collection, said Finance Minister Joaquim Levy during a public hearing held Wednesday (Apr 29) with the Commission on Finances and Taxes of the Chamber of Deputies. According to Levy, the economic staff will only be favorable to the bill if the impact on tax collection is brought down to zero.

“The bill cannot serve as a means to reduce taxes,” the minister argued.

Joaquim Levy explained that, while the text of the bill was under discussion in the lower house, the government tried to reach an agreement which would bring about tax simplification without affecting the revenue collected in taxes. He says the idea was to ensure companies could contract with no difficulties, making the payment of taxes and social security charges easier.

“We've made a proposal aimed at fiscal simplification, which consists of withholding tax. Before paying companies contracted, contractors withhold the taxes at the source. This reduces exposure, the lack of legal confidence, and simplifies the entire process,” he clarified.

In Levy's view, as it stands now, the text will not just cause the government revenue to drop, but also create different categories for workers. “We can't have a worker paying 27.5% in income tax, and another who takes dividends and doesn't pay anything to social security,” Levy declared.

Translated by Fabrício Ferreira

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