August 10, 2023
Brazil Senate considers VAT reform plan
The Brazil Senate is currently analyzing a tax reform proposal for indirect taxes that, after many years of discussion, passed the Chamber of Deputies on 7 July 2023.
The proposal provides for a major simplification of the Brazilian tax system, streamlining the five existing indirect taxes into just two main taxes (IBS1, state and municipal, and CBS2, federal) plus an excise tax and a possible state contribution applied upon primary and semi-finished products (still under discussion in the Senate).
In addition to significantly simplifying the current tax system, the proposal would generate a wide range of changes in markets and relative prices of products, and might also reduce the "weight" of tax factors in allocation decisions for productive and commercial investments.
If the reform is approved as proposed, its implementation will require considerable transition time. Therefore, taxpayers should begin taking action now to prepare for the change, such as:
Our team of EY specialists in Brazil is prepared to help our clients understand and assimilate the tax reform into their routines and processes, as well as address challenges imposed by the new tax rules.
For additional information with respect to this Alert, please contact the following:
Ernst & Young Brazil
VAT and Global Trade experts:
Tax leading partner:
Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor
1 IBS (Imposto sobre Bens e Serviços) is a tax on goods and services.
2 CBS (Contribuição sobre Bens e Serviços) is a "contribution" on goods and services.