Deputy Severino Cavalcanti (PP, Pernambuco), together with three fellow-congressmen, has submitted an amendment to the tax reform that would exempt broadcasters from ICMS sales tax. Broadcasters don?t pay ICMS under the legislation currently in force but some states are demanding inclusion and there?s pressure for it inside Confaz, the council of state finance secretaries.
In his presentation of the amendment Dep. Cavalcanti stresses ?the understanding of the most renowned jurists in the land, of various state governments and of Congress (…) that ICMS should not be levied on the activities of broadcasting companies?.
The Constitution clearly distinguishes between communication services, which are subject to ICMS, and broadcasting, he goes on. From the economic standpoint, having to pay ICMS would be damaging to broadcasters at a time of financial crisis due to the fall in advertising and the severe impact of devaluation on their dollar debts.
Furthermore, Dep. Cavalcanti points out, broadcasters are undergoing a technological transition that requires long-term planning of capital expenditure. Given all these factors, the broadcasting industry requires guarantees that ICMS tax won?t be levied on its activities, he argues.