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In Brazil’s political and economic environment, discussions and expectations surrounding tax reform are intense. Understand the main aspects!
Talks about tax reform in Brazil are constant and highly anticipated in our political and economic context. This reform aims to make the tax system simpler, fairer, and more effective for all taxpayers.
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Although complex, tax reform is vital to accelerating the country’s economic and social progress. To better understand this change, let’s detail its main elements and effects on society!
Changes that tax reform will bring
Introduction of the dual VAT
The Federal VAT (Value Added Tax), or CBS, will replace the IPI (Tax on Industrialized Products) and contributions to PIS/Cofins.
On the other hand, the Tax on Goods and Services, known as the Subnational VAT or IBS, will replace the ICMS (Tax on the Circulation of Goods and Services) and the ISS (Tax on Services). This will facilitate tax collection at the federal and state levels.
Three VAT rates
A standard rate will be established, along with a 50% reduced rate and an exemption for specific cases, taking into account the distinct realities and requirements of companies and economic sectors.
Change in the point of taxation
Gradually, the places where taxes are collected will shift from the point of origin to the point of consumption, balancing the distribution of resources among the country's regions.
Phased implementation
The reform will take place in stages to reduce negative impacts and allow adjustments during the transition. The initial phase will consist of a test with a 1% CBS rate.
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Then, the full collection of CBS will take place. Next, there will be a transition to the subnational tax (IBS). Finally, the new system will come into effect.
Creation of funds
The Regional Development Fund will reduce regional inequalities, and the Tax Benefits Compensation Fund will compensate sectors for losses resulting from tax benefits.
Refund of amounts to individuals
The reform will allow individuals, particularly lower-income groups, to recover amounts through the cashback system. This is intended to encourage consumption and directly benefit those most in need.
Income and property taxation
The government will submit a proposal for income tax reform to Congress, aiming to make the system fairer and more effective. Additionally, a specific Motor Vehicle Property Tax (IPVA) for yachts and private jets will be introduced.
Maintaining current tax regimes
Finally, the Manaus Free Trade Zone and Simples Nacional will continue to enjoy tax benefits.
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