First version of Tax Reform Proposal by Brazil´s Finance Minister with expected VAT rate to average 26,5%
TAXSPOC News Desk
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)
Brazil Indirect Tax LATAM VAT reform
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