Among the list of the top 500 registered tax debtors in the active debt of the State of São Paulo in 2024, there are at least 28 companies benefiting from R$289 million in tax benefits. In total, beneficiaries currently have R$20.3 billion in tax debt owed to the state treasury, much of which refers to ICMS debt.
The data comes from a cross-reference made using public databases from the government of São Paulo, compiled by the office of State Rep. Paulo Fiorillo (PT). The survey only takes into account companies covered by a type of benefit called “extended credit,” which is the only way for which the government has released data on covered companies.
In October, after being criticized for accumulating tax revenue exemptions by the opposition and the State Audit Court, the State Finance Secretariat signed an agreement with the court and began publishing the company name and National Register of Legal Entities (CPNJ) of companies benefiting from ICMS exemptions.
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In the extended credit model, the government allows a company to reduce the tax due through a credit created by law, without relying on common situations that normally grant the right to credit. In other words, while a tax credit eliminates the tax and a rate reduction reduces the value from the initial calculation, the credit granted maintains the “regular” tax, but then grants a direct reduction, as a means of encouraging that economic activity.
Among the indebted companies that make up the list of beneficiaries are large groups such as BRF, Claro, Gerdau and White Martins.
At the top of the list of the 500 largest debtors, but not among those who received the benefit of the credit granted, is the Refit group, which on Thursday (27/11) was the target of a massive operation against an alleged billion-dollar tax evasion scheme. In São Paulo alone, the group was accused of having tax debts amounting to approximately R$9.6 billion.
Criticisms of TCE and the opposition
the Capitals It showed that among the 50 largest companies benefiting from tax breaks granted by the administration of Governor Tarcisio de Freitas (Republicans), at least 31 of them have debts registered in active state debt.
The data is contained in a technical report on portfolio accounts for 2024, presented by Counselor Dimas Ramalho, rapporteur on the subject at TCE. In June, the court approved the administration’s accounts, but made reservations on some points, especially with regard to tax exemptions.
“The finding that a significant portion of the largest beneficiaries of tax incentives in São Paulo are also on the list of active debtors raises serious and worrying questions about the rationality and fairness of the incentive policy,” the consultant stated in the report.
For Ramalho, “it is ironic and, to say the least, counterproductive for the Treasury to accumulate debts for companies subject to differential tax treatment.”
The advisor also states that such a situation could lead to “potential failures in grant criteria” or in monitoring benefits.
“Allowing business entities with questionable financial health or a history of default to continue to indirectly benefit from public resources, at the expense of other taxpayers and the state’s fiscal sustainability,” he says.
This scenario also sparked criticism from opposition representatives.
“It is shameful that the government continues to give tax benefits to companies that owe billions to state coffers without counterparts at least applying for this kind of benefit. It is a hard-earned resource from São Paulo taxpayers, and the governor has been using it to mediate with the private sector. Our mandate will summon the TCE and the MP so that the state government can explain its position,” says Fiorello.
However, tax lawyer and professor at Fundação Getúlio Vargas (FGV), Carlos Eduardo Navarro, explains that the fact that a company owes taxes does not necessarily prevent it from receiving some type of tax benefit.
Navarro points out, “Often, companies discuss these debts at the administrative or judicial level. If it is at the judicial level, these debts are often guaranteed. As a rule, this does not prevent the use of tax incentives. Of course, incentives may have different rules, but in general, incentives cannot be used by those companies that are actually indebted and do not guarantee this debt.”
What does the SP government say?
- In a memorandum, the Secretariat of Finance and Planning (Sefaz-SP) stated that tax incentives, including the type of credit granted, are granted on a sectoral basis, and are linked to economic activities stipulated in the law and not to individual companies.
- “The legislation does not allow the granting or withdrawal of benefits based on the specific situation of each taxpayer,” the ministry says.
- “The presence of debts registered in the State CADIN or in active debt does not necessarily mean a required default. The benefit may be preserved in cases provided for by legislation, such as active installments, guarantees provided or administrative or judicial processes that suspend the enforceability of credit, cases in which the debt does not produce crippling effects”, highlighted the State Administration.
- Furthermore, Cevas stated that it is “continuously working to improve transparency and exemption monitoring mechanisms, while advancing the governance and administration of tax benefits recognized by the State Court of Auditors, including improvements in information exchange and management of incentive grants.”