CPMF was a bank tax which focuses on individuals and companies. It was created by the Government in 1996 and had the function of covering government expenditures related to several areas, such as Social Security and health. Extinguished in 2007, now or another one is talking about a new CPMF.
Surely everyone has heard of CPMF in the news. However, if you ask people: “CPMF: what is it?” many will not know the true meaning or purpose of this tax, which was frowned upon by society and well regarded by the Federal Government.
A CNI / Ibope survey on the CPMF revealed that only 32% of UK citizens knew how to say what it was in fact this tribute.
Although you are no longer in the financial market, it is important to know what is CPMF and what are the impacts of a tax like this, which has been in evidence in the economy for so many years.
In this article we will talk about what the acronym CPMF means and give details about its evolution over the years, how it worked and how it impacted investments.
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CPMF: what is it?
We first need to understand what the acronym CPMF means, which is Provisional Contribution on Financial Transactions.
It has been a major milestone in the financial market since it was created in 1996 based on Law No. 9,311 / 1996.
The CPMF was a taxation on bank transactions.
Its rate has varied over the years and reached 0.38%.
This tax was levied on bank transactions of both individuals and companies. Being charged at:
- billet payments,
- card bills,
- TED and DOC,
The following were excluded from the payment of this tax:
- the chargebacks,
- unemployment insurance,
- withdrawals related to FGTS,
- transactions of the same ownership.
The CPMF was valid for two years.
What did the CPMF law say?
CPMF was provided for in Law No. 9,311 / 1996 and said the following:
“1st Provisional Contribution on the Movement or Transmission of Values and Credits and Rights of a Financial Nature – CPMF is instituted.
Single paragraph. The movement or transmission of values and credits and rights of a financial nature is considered to be any liquidated operation or entry carried out by the entities referred to in art. 2 °, which represent book-entry or physical circulation of currency, and which may or may not result in the transfer of ownership of the same amounts, credits and rights. ”
How was it in practice?
Now that we know what CPMF is and its function, let's explain how it worked in practice.
Known many times as “check tax”, it not only incurred this form of payment, but also several financial transactions. Since payment of a card bill, ATM withdrawals until financing.
It was presented in the market and as a tax that is easy to collect for the government and difficult to evade by the population and companies.
The account was simple, it was enough to multiply the value of the operation by the rate that reached 0.38%. In other words, when buying a car in the amount of R $ 50 thousand, the CPMF would be R $ 190.00.
In the blog we already talked about the main taxes in force and paid by companies in the country in the article, “What is a tax? Understand the definition and the main taxes paid by companies in Brazil ”.
In what cases was CPMF charged?
This tax was levied on several financial transactions. Check out what were the cases:
- Payment of slips;
- Payment of card bills;
- Bills paid by card, both debit and credit;
- Withdrawals made at ATMs;
- Checks discounted;
- Transfers made to accounts of another owner;
- Transfer to investment accounts;
- Bank transfers (TED and DOC);
- Financing payments and loan installments;
- Check cashing.
In what cases was it not charged?
There were also some cases in which the CPMF was not charged, know what those situations were.
- Specific withdrawals such as PIS / Pasep and FGTS;
- Purchase of shares on the stock exchange;
- Transfers between accounts of the same holder;
- Payments for unemployment insurance;
- Financial operations aimed at charities.
What was the tax for?
We also need to talk about what CPMF was for. This was a tax that functioned as a revenue support for the government.
The money collected through the CPMF had as its first objective to be a collection destined to the National Health Fund. However, over the years it has also served as an investment for the Social Security and Poverty Alleviation Fund.
Between 1997 and 2007, the Government raised more than R $ 223 billion due to the CPMF. In 2007 alone, the last year of validity of this tax, there was a payment above R $ 37 billion.
It is estimated that between 1998 and 2006, revenue through the CPMF grew by 216.1%.
What were its impacts on the economy?
Within this questioning of “CPMF: what it is”, we can highlight its main impacts on the economy while it was in force.
Seen with dislike for society, with the CPMF in operation there would be a stimulus for the use of cash, which in the opinion of the experts in economics would cause a debunking.
Consequently, there would be an increase:
This is because, if companies needed to spend more on their financial transactions on account of the CPMF, the final price of the products would also be higher.
Not to mention that with this stimulus to the use of cash to avoid paying the tax, it would cause a lot of insecurity in the population. Because, many would choose to withdraw money only once and would be exposed on the streets, with more money in their pockets.
What were the benefits of the CPMF to the government?
Despite knowing from CPMF what it is and its bad reputation in society, for the federal government it was extremely advantageous and contributed a lot to the closing of public accounts.
We have selected below some of the reasons why he was successful with the government.
- Instant box: as it was charged in most financial transactions, this tax consequently fed the government's cash constantly.
- Difficult tax evasion: its ease of collection prevented many from trying to evade it.
- Provisional tax: as it had a duration, it was easily approved by Congress.
- Lower inflation: the impact that this tax has on inflation is less than other taxes.
When was the CPMF extinguished?
The CPMF appeared in 1996 and was extinguished in 2007, on December 13th.
Despite its provisional character at the time of implementation, since it was supposed to last for two years, this tax was extended four times by different governments.
The revocation of the CPMF was made by the National Congress and occurred during the second mandate of Luiz Inácio Lula da Silva.
What is the possibility of this tax coming back?
Several governments have already discussed the return of the CPMF, despite numerous criticisms of this tax. Even if there is a constitutional amendment that suggests and indicates a possible return of this tax, it currently seems out of the question.
This is because it is extremely unpopular with civil society and companies.
The President of the Republic, Jair Bolsonaro, said in recent interviews that his government “does not want to create any new taxes”. And the current minister of the economy, Paulo Guedes, called the CPMF “tax of damn”.
New CPMF: is it possible?
As we said, it is unlikely that the CPMF will return, however Paulo Guedes himself reiterated that he is in favor of an alternative to offset the collection with the end of this tax.
He recently stated that the country “needs an alternative tax base”. Suggesting at the time a tax that would work along the lines of the old CPMF.
A CNI / Ibope survey showed that more than 73% of UK citizens were against the return of the CPMF. 70% point to the CPMF as an unfair tax.
Why is it important to know what the CPMF is?
If you had no idea of the answer, if you were asked “CPMF: what is it?”, Throughout this article we have unraveled everything about this old tax. We not only showed how it worked, but also what it did.
We also detail its impact on individuals and companies and talk about the possibilities of this tax coming back one day, which are currently minimal. After all, he is not well regarded by society.
It is clear that for the Government this was an extremely important collection in order to obtain funds for investments from different sectors. No wonder, as we said earlier, between 1997 and 2007, the collection through the CPMF exceeded R $ 223 billion.
That is why year after year the discussion of a new tribute comes back to the fore. Especially because, in theory, it can be easily approved by Congress, and implemented on a daily basis, in addition to being differentiated by the low rate of tax evasion, in case it enters into force.
So the importance of knowing what the CPMF is and how it works, so be prepared if one day it returns.
Continue reading on, “What is IOF? Understand how this tax works ”.
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