Brazil: expected VAT Rate Revealed!

Minister Fernando Haddad (Finance) introduced the first tax reform proposal to the National Congress

The proposal, presented on Wednesday April 24, 2024, encompasses:

• The general operational rules for the new taxes: federal CBS (Contribution on Goods and Services), state and municipal IBS (Tax on Goods and Services), and IS (Selective Tax).
• VAT (Value Added Tax) rate between 25.7% and 27.3%, averaging at 26.5%.
• 26.5% average is the primary reference, potentially making Brazil's VAT rate one of the world's highest, compared to Hungary's current 27% rate.
• Initially, the Ministry of Finance had not planned to unveil these rates yet. Still, the economic team anticipated that this information would be a key demand from deputies as the project advances.
• Last year, the government estimated a rate of up to 27.5%, but revised figures were slightly lower due to stricter regulations in the reform project, particularly concerning differentiated or reduced rate regimes.
• Notably, this disclosure marks the first time the government has revealed the average rate variation band, a critical aspect in the reform's implementation.

Further Read and Inspiration

Source: Finance Minister Submits Tax Regulation Bill to the Brazilian Congress - 25/04/2024 - Business - Folha (uol.com.br)