The pay-television industry is especially concerned about one issue in the tax reform debate: a bill (PLP 060/2003) submitted June 18 by Deputy Luiz Carlos Jorge Hauly (PSDB, Paraná) to define the service as subject to municipal service tax (ISS), whatever the technology used to deliver it, is apparently not sustainable. The bill has barely begun the committee stage but Dep. Hauly?s argument (identical with ABTA?s position) that like the Internet pay TV is essentially content distribution using a means of signal transport seems unlikely to hold water because the tax reform bill now about to go to the Senate would subject all content providers to state-collected sales tax (ICMS). Only broadcasters would be exempt because they deliver service free to the end-user. Luiz Carlos Baliero, counsel for Abril, says the tax reform as currently drafted (and passed by the lower house) undermines Dep. Hauly?s argument. The issue has already gone before the courts, Mr Baliero notes. Two TVA affiliates in Paraná are parties to suits pleading that content distributors shouldn?t pay ICMS. TVA is awaiting rulings on this from the Supreme Court and the Federal Court of Appeal (STJ). The courts won?t be able to accept the argument if the Constitution is amended as proposed, he says.
Tax reforms
