Tax exempt paper will have mandatory label and national control

With five months late, will come into force from June the national Recopi system of supervision of transactions with tax exempt paper, today restricted to the State of São Paulo in Brazil. Almost at the same time, the anticipated and debated different label to identify batches of this type of product will become mandatory in the country. According to the legislation, only the paper for the printing of books and periodicals is tax-free. And, a few years ago, the fight against fraud represents one of the greatest challenges of the Brazilian industry.
At the end of 2012, the federal Government published in the Official Gazette of the Union an agreement establishing the terms for eight States and the Federal District to implement the program, which already has yielded fines of more than $ 300 million imposed by the State Farm, resulting from irregular operations with tax-free.
From 1 June, as the ICMS agreement 136, taxpayers of Bahia, Goiás, Minas Gerais, Pará, Paraná, Rio de Janeiro, Rio Grande do Sul and Santa Catarina, plus the Federal District, who wish to perform operations of purchase and sale with this type of product will need to be accredited by Recopi, or recognition program and control of tax exempt paper. The accreditation, in turn, will start on April 1.
According to Eduardo Oliveira, partner at M.P.O consulting business, there are still many doubts in relation to the National Recopi. "The ICMS agreement 136 authorizes the extension of time limits [that sealed the end of the year] to the States which have acceded and says that from June 1, the system is in place so that there is a need for information sharing on the part of taxpayers who perform operation with tax exempt paper," he says.
Another new long awaited, the use of specific labelling for identification of packages containing paper for the printing of books and periodicals in the country shall be mandatory on July 1. As the Normative 1,316, January 4, the internal revenue service, "paper for the printing of books and periodicals should be labeled with the range containing the expression ' Immune ' Role", in black. The track should be applied both in reams or in coils.
The measures represent an important victory of the national paper industry-leading manufacturers are Suzano, Klabin and International Paper, which for years complains of the negative impact the diversion of duty-free has particular role in the markets and "cut size (A4 paper). The Brazilian pulp and Paper Association (Bracelpa) estimates that more than 600 thousand tons per year of paper that is declared immune are used for other purposes than those provided for in law (teaching and cultural purposes). The role that results from illegal operations, say industry sources, hits the market up to 40% cheaper than the product that collected taxes and causes distortions in price, among other consequences to the national economy.
The initiatives have the support of importers of paper, including the APP and Sappi, who sent a letter on 16 the representative entities of the sector with the "basic premises in return for collaboration in various projects of common interest". Among the demands are the postponement or termination of any pending anti-dumping proceedings against coated paper and paperboard imported until at least the end of 2013, support of the domestic industry to reduce the tax burden and return the import tax for 14%-25%-today, I also support the Elimination of the requirement of certificates of origin for imports and the "immediate return" of automatic import license.
Last year, until November, Brazilian imports of paper retreated 3.6 percent, on the tax and the high increase of the deadlines for placing the product on the domestic market, according to suppliers of the imported product. In matching, importers, suppliers and trading companies say they are in favour of specific labelling of tax-free, provided that they can participate in the "adaptation of the regulation of law" who establishes the label and established businesses are not disproportionately burdened. ""
These market agents, who plan to gather in a new Association, also declare their "unconditional support" to the actions of supervision and control by Government users of tax exempt paper, with the promise of adopting "devices to treat our actions in our own internal rules".