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Tax burden on health insurance plans

This Executive Summary was developed based on a study prepared by the Brazilian Institute for Planning and Taxation (IBPT) in order to evaluate the tax burden put on the health, dental, and medical insurance plans. The main results of the study are highlighted below.

• Brazilian private health insurance, which ensures health care coverage for 72 million beneficiaries, providing a service network that represents 86% of all private health care providers in the country, has a high tax burden, and for group medicine insurance companies, it reaches up to 26.7% of their income.

• The tax burden on health insurance plans emerges as one of the highest compared to other parts of the service sector that are just as necessary for the population as healthcare, such as basic food products (18.2%), sanitation (16.6 %), and education (21.9%).

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Tax burden by industry

Source: IBPT/Abramge 2014 Survey: "X-ray on the Taxes of the health insurance companies".

• Furthermore, the tax burden on health insurance plans grew by more than 1 percentage point in the last 4 years, going from 25.6% in 2009 to 26.7% in 2013, which is absurd when considering the recent policy that lowered taxes on various sectors of the economy, but not on healthcare.

 

Tax Burden on Health Insurance Plans - 2009-2013

Source: IBPT/Abramge 2014 Survey: "X-ray on the Taxes of the health insurance companies".

• Of each R$ 100 paid by the beneficiaries, R$ 26.70 is used to pay taxes, with about R$ 21.00 in indirect taxes that are part of the prices of health products and services consumed by the beneficiaries, and R$ 6.00 in direct taxes paid by the health insurance companies directly to the tax authorities.

• Between 2009 and 2013, the amount paid in direct taxes on health insurance plans increased by 71.6% and the indirect taxes by 66.6%, which is a higher rate than the growth in revenue (60.9%) and in health care costs (67.5%).

 

Tax Scenario for Group Medicine Insurance Companies: 2009 to 2013

 

Amount in billions of R$

Variation

(2013/2009)

2009

2013

Revenue

19.6

31.5

60.9%

Health care costs

15.5

26.0

67.5%

Direct taxes

1.0

1.7

71.6%

Indirect taxes

4.0

6.7

66.6%

Source: IBPT/Abramge 2014 Survey: "X-ray on the Taxes of the health insurance companies".

 

• In addition to the high tax burden, the sector also suffers from a complex collection system that requires these companies to expand their fiscal areas and to make considerable investments of their resources in these areas and in specialized consulting. The average cost of ​Brazilian companies’ internal tax departments can expend up to 1.7% of their revenues in Brazil.

• Another indication of the difficulties faced is the average time (in hours) spent by Brazilian companies to comply with the tax system, which reaches about 2,600 hours a year or more than 100 days. In a ranking with over 100 countries, Brazil placed last for this indicator.

• Therefore, it is necessary to rethink the tax policy for the health sector in order to facilitate people's access to its products and services, whether they be public or private. Furthermore, a tax reform would bring positive impacts for the economy as a whole in an egalitarian way, increasing the efficiency and competitiveness of the companies, stimulating entrepreneurship and investment, and ultimately fostering the country's growth and economic development.

 

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