The tax burden in our country is extremely complex especially for companies. The Tributary Replacement (commonly called ST) a tax collection regime practiced in Brazil, is one of the items that most causes doubts to entrepreneurs and accountants. Knowing the legislation, the form of collection, the rates and applicability are essential to perform the ST correctly. As the legislation is dynamic and constantly updated, in addition to understanding the concepts of the process, it is also necessary to always consult the legal updates in this regard.
We have prepared a complete explanation made in a simple and clear way to help you understand how the Tributary Replacement works and to solve all your possible doubts about it. What is Tax Substitution? To correctly carry out the Tax Replacement, it is necessary, first of all, to understand Consumer Email List what it is and how it applies. The name “substitution” refers to the fact that another person is responsible for paying the tax – in this case, the ICMS – and not the person who generated the sale itself. The Federal Constitution of 1988 provides for the possibility of assigning the obligation to pay a tax or a contribution to a third person, instead of the one who would normally do so.
For example a producer or importer is obliged to pay ICMS related to the sales chain that goes from the wholesaler to the retailer and, later, to the final consumer. As the taxable event is the sale to each intermediary in the business chain, after the circulation of the goods, it is said that the tax was collected via “Tax Replacement forward”. The calculation of the tax due is based on the presumption or estimate of the price that will be charged to the consumer. This assumption that allows the calculation of the applicable rate is not individualized, but instituted by the government based on the average profit margin of each segment.