SP Art Brazilian Routes
SP Art Brazilian Routes

Until next Wednesday, December 11, the country's visual arts sector will be on red alert. The president of the Federal Senate, Rodrigo Pacheco, indicated that the Tax Reform bill will return to Congress on Monday and, on Wednesday, it could go to the plenary of the house, as a priority for closing the year. But what does the arts sector have to do with the reform? Basically, everything. 

When a visual artist sells a work of art, the sale of a piece (a painting, engraving, conceptual object, sculpture, etc.) is carried out with exemption from ICMS, there is no consumption tax (the tax will only be applied to the artist in his/her Income Tax return). Usually, during art fairs, when this operation is carried out by a gallery, there is the benefit of the presumed ICMS credit, which consists of the following: the work enters the gallery without charging ICMS, and, upon sale, there is still the presumed credit (also known as granted credit, a resource used by states and the Federal District to exempt the taxpayer from the tax burden that will be levied on operations). With the tax reform (Bill 68/2024), these benefits for the visual arts will be extinguished. 

The reform provides for the exclusion of the sale of works of art from the Differentiated Regime, a mechanism that reduces the Value Added Tax (VAT) rate by 60% for sectors such as events and audiovisual. It is a complex situation: the new law creates rules that will make dual Value Added Tax (VAT) viable, with the replacement of five taxes (ICMS, IPI, ISS, PIS and Cofins) by three: Contribution on Goods and Services (CBS), at the federal level; Tax on Goods and Services (IBS), at the state and municipal level; and the Selective Tax, at the federal level. The fact is that, as a consequence, this should increase the price of a work of art in the country by up to 27%. For comparison purposes, other nations, such as France, Belgium, England and Germany, currently apply rates between 5% and 7%. Direct sales of artists' works by galleries have a presumed 50% tax credit, only at fairs are they exempted by 100%.

Galleries, dealers, fairs, exhibitions, artists and activists in the sector are alarmed and seeking to reverse the situation. In an unprecedented (and rare) mobilization, the first in history, the visual arts created this year the Coletivo 215, an alliance between the Brazilian Association of Contemporary Art (ABACT, which represents around 60 contemporary art galleries in Brazil), ArtRio, SP-Arte and the Brazilian Art Galleries Association (AGAB). Their activism advocates for the defense and strengthening of the sector, but their main focus is to demand strict compliance with article 215 of the Federal Constitution, which gives the group its name. This article guarantees the full exercise of cultural rights, the expression and dissemination of cultural expressions and access to culture. 

According to the collective, the visual arts market could suffer a rare international isolation if the Tax Reform is approved as it is, due to the increase in the cost of trading in works of art. According to a diagnosis by Coletivo 215, art fairs are a strong boost to the Brazilian creative economy. They bring together around 200 galleries every year, exhibit over 2 artists and receive around 100 visitors, generating over 10 direct and indirect jobs and allowing the collection of over R$20 million in taxes. 

Galleries estimate that, with their exclusion from the Differentiated Tax Regime, the situation could even lead to the closure of many of them, especially the smaller ones. It could also drive away international galleries that might want to acquire works by Brazilian artists, due to the higher prices, and even impact artistic production, by strangling them. The visual arts want to receive attention on an equal footing with other sectors of culture. 

Gallery owner Alexandre Roesler sees a real risk of a setback in the cultural sector. “The cultural sector has always been treated differently, not only here in Brazil, but throughout the world, due to culture’s ability to define national identity, its soft power characteristics, and its importance to people’s lives,” says Roesler. “The reform is very welcome, it will simplify and reduce bureaucracy for a number of things,” he says. But it needs to ensure equality for the arts. 

According to the gallery owner, when the constitutional amendment was made, there was an understanding that, yes, it was necessary for the cultural sector to continue to receive special treatment. “So, they stated that artistic and cultural productions would have a 60% reduction in the final rates. This was taken into consideration for some strategic sectors, such as education, health and culture. Apparently, everything was in order. But, when they wrote PLP 68, in the definition of what constitutes national artistic and cultural production, they only included services.” 

Thus, several segments of culture were fully covered, such as audiovisual and the events sector, but not visual arts. “The product of the visual artist is not a service. Artists produce works of art that are tangible objects; it is not a service provision. What we are asking is that transactions involving goods also be included [in the text], because if it is not covered, painters, sculptors, gallery owners, the entire chain will be seriously harmed.” 

In fact, Constitutional Amendment 132, approved at the end of 2023, established that artistic and cultural productions will receive special treatment in the reform. However, for Coletivo 215, it is still necessary for regulation by complementary laws to define the sectors that will benefit under this umbrella of “cultural and artistic productions”. In May of this year, the group sent a Technical Note to the Working Group of the Chamber of Deputies that deals with the subject (and to the Ministry of Finance), which contains the proposal for Amendment 477, which suggests that the special regime for the sector covers “transactions with services and goods, tangible and intangible, involving production, fair, exhibition, intermediation, import, repatriation and trade of intellectual works”. 

“The approval of Amendment 477 will have a positive impact on this economic sphere, generating jobs and income, and promoting Brazil’s image on the international stage,” the group said in a statement. “The art market not only becomes part of the country’s cultural heritage, but also promotes and finances national artists, creates opportunities and social inclusion, democratizes access to Brazilian and foreign art, and directly and indirectly drives the economy, with an impact on business, tourism, and cultural production.” 

In the internet forums that discuss the issue, there are also observers who argue that the visual arts sector, as one of the most prosperous in cultural activity, should be subject to heavier taxation. “Otherwise, it will be like the absurdity of meat, which is included in the basic food basket,” said one of them. 

“The non-inclusion of works of art in the differentiated regime, as part of national cultural production, seems to have been the result of a mistake that included services but not goods”, says Cris Olivieri ― lawyer at Olivieri & Associados, specialized in art, culture and entertainment and with a master's degree in cultural policy.

The rapporteur of the Tax Reform bill, Senator Eduardo Braga (MDB-AM), and the president of the Constitution and Justice Committee (CCJ), Davi Alcolumbre (União-AP), intend to first put the text to a vote in the Constitution and Justice Committee (CCJ), the only committee that will analyze the bill before it goes to the Plenary. Thirteen public hearings have already been held, almost 13 debaters have been heard, and the rapporteur has received more than 200 people in his office. Another 800 public hearings have been held in the Economic Affairs Committee (CAE). Even so, the Visual Arts group is actively working on several fronts, seeking to involve the political class, artists, the Ministry of Culture and the Ministry of Finance. “We hope to achieve this because this is very important, including for equal treatment of culture; some sectors cannot be included and others not,” says Alexandre Roesler. The report by ARTE!Brasileiros sought the Ministry of Culture to find out whether the department is aware of the case and what its stance is on the matter, but had not received a response by the time this edition went to press. 


Sign up for our newsletter

Leave a comment

Please write a comment
Please write your name