Brazil: Chamber of Deputies approves indirect tax reform bill

Under the reform measure, Brazil will introduce a dual VAT regime

Under the reform measure, Brazil will introduce a dual VAT regime

Brazil’s Chamber of Deputies on 15 December 2023 approved a constitutional amendment bill with the basic text of a tax reform involving federal, state, and municipal indirect taxes. The reform, which initially received approval in July, was subject to another vote after the Federal Senate revised the text in November, prior to returning it to the lower house. Read TaxNewsFlash

Under the reform measure, Brazil will introduce a dual value added tax (VAT) regime including:

  • A tax on goods and services (imposto sobre bens e serviços—IBS) that will replace the state VAT (imposto sobre circulação de mercadorias e serviços—ICMS) and the municipal tax on services (imposto sobre serviços de qualquer natureza—ISS)
  • The contribution on goods and services (contribuição sobre bens e serviços—CBS) that will substitute the federal PIS/COFINS contributions, as well as the federal excise tax on manufactured products (imposto sobre produtos industrializados—IPI)

The reform will 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%, which will be increased gradually, and termination of the PIS and COFINS and IPI from 2027. By 2029, the ICMS and ISS will be gradually reduced, the CBS and IBS rates will be gradually increased. Full implementation of the regime is set to happen from 2033.

Read a December 2023 report [PDF 1.9 MB] prepared by the KPMG member firm in Brazil 



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