Panel SA: Capitals reduce ISS to avoid tax war for franchises

Pressured by a decision of the STF, São Paulo pulled the line and decided to reduce the ISS, the tax levied on services by city halls, to avoid a flight of franchises to neighboring municipalities. The sector is one of the biggest employers.

The rate in the capital of São Paulo, which was 5%, went to 2%, the legal minimum allowed. The initiative was a reaction to neighboring municipalities, such as Barueri and Santana do Parnaíba, which had been attracting the headquarters of these companies by charging the minimum possible to concentrate the revenue paid by the franchisors.

Curitiba (PR) and Goiânia (GO) also reduced the ISS on franchises. The Assembly of Rio de Janeiro had scheduled the vote on the project for this Thursday (10) and Florianópolis (SC), for next week.

This movement gained strength not only to contain a fiscal war between municipalities for the revenues generated from the ISS. A decision by the Federal Supreme Court imposed on franchise chain owners the obligation to pay ISS on the revenue of the entire chain – on average, 7% of annual revenue.

The battle between franchisors and city governments – which lasted almost two decades in the Supreme Court – has come to an end.

By the decision, the billionaire liabilities of the past will be restricted to the last five years and, from now on, the ISS will be paid on royalties –amount paid by franchisees to the owner of the networks– referring to training and supply of inputs if it configures service provision. .

Julio Wiziack (interim) with Paulo Ricardo Martins and Diego Felix