Brazil: Federal Senate approves indirect tax reform bill
Brazil’s Federal Senate approved its version of a constitutional amendment bill
Brazil’s Federal Senate approved its version of a constitutional amendment bill
Brazil’s Federal Senate on 8 November 2023 approved its version of a constitutional amendment bill with the basic text of a tax reform involving federal, state, and municipal indirect taxes.
The senate’s version includes several changes to the bill adopted by the Chamber of Deputies (lower house of parliament) on 6 July 2023. Read TaxNewsFlash
The bill is now going back to the Chamber of Deputies for further deliberations.
If the tax reform is enacted, Brazil will introduce a dual value added tax (VAT) regime including:
- A tax on goods and services (Imposto sobre Bens e Serviços, or IBS), that will replace the state VAT (Imposto sobre Circulação de Mercadorias e Serviços, or ICMS) and the municipal tax on services (Imposto Sobre Serviços de Qualquer Natureza, or ISS)
- The contribution on goods and services (Contribuição sobre Bens e Serviços, or CBS), that will substitute the federal PIS/COFINS contributions as well as the federal excise tax on manufactured products (Imposto sobre Produtos Industrializados, or IPI)
The reform would be introduced over a transitional period of seven years beginning in 2026—with the introduction of CBS at a rate of 0.9%, and IBS at a rate of 0.1% that would be increased gradually, and termination of the PIS and COFINS and IPI from 2027. By 2029, the ICMS and ISS would be gradually reduced, the CBS and IBS rates would be gradually increased. Full implementation of the regime is proposed to happen from 2033.
Read an updated November 2023 report [PDF 1 MB] prepared by the KPMG member firm in Brazil.
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