Most experts have so far pronounced themselves pessimistic about the impact on the pay-television industry of the tax reform which has just passed the lower house and now goes before the Senate. But José Francisco de Araújo Lima, director of ABTA and tax lawyer, is less disheartened. His personal view is that the proposal to exempt broadcasters from state-collected sales tax (ICMS) doesn?t necessarily pose a problem for pay TV. ?The tax reform doesn?t subject content distribution services to ICMS as such,? he argues. Moreover, although many people in the industry are concerned that ICMS tax may have to be paid on what the bill terms imported communication services Mr Araújo Lima says ?there seems to be no link between that and the acquisition of licenses to exhibit programming produced abroad?.
On the question of tax rates and how equipment and services will be classified for this purpose in the Senate, Mr Araújo Lima says ?it?s much too early to know what will happen?. In his view, however, ?the door has been left open for the lowest tax rate to apply to basic subscription packages targeting low-income consumers?. Commenting on a topic also highlighted by Ana Cláudia Utumi, a lawyer with Tozzini, Freire, Teixeira e Silva, the special 10% ICMS rate currently paid by pay TV can?t be abolished by the tax reform because it was granted for 11 years by Confaz, the council of state finance secretaries. ?So the 10% rate stays for some time even if all other battles are lost, which I personally am confident won?t happen,? he says.