Brazil’s Chamber of Deputies have approved a law to regulate the country’s indirect tax reform after it has returned from the Senate (upper house) with amendments on 17 December 2024.
This follows after Brazil passed Constitutional Amendment No. 132 of 20 December 2023 on 20 December 2023, introducing major indirect tax reforms.
These reforms will replace or unify several existing indirect taxes with new tax measures. The reforms include replacement of three federal taxes (PIS, COFINS, and IPI), one state value added tax (ICMS), and one municipal tax (ISS) with two new taxes: The contribution on goods and services (CBS), tax on goods and services (IBS), and a new federal selective tax (IS).
The new legislation introduces a 60% rate reduction for CBS and IBS in various sectors, including education, healthcare, agriculture, national security, public transportation, and more. The law regulates new taxes, covering taxable events, payments, credits, refunds, collection methods, and the transition to the new system.
Congressman Reginaldo Lopes (PT-MG) stated that the tax reform amended by the Chamber reduces the tax burden for Brazilians by 0.7%, unlike the Senate’s version, which increases rates.
While approving most of the Senate’s changes, the Chamber reinstated the Selective Tax on sugary drinks, impacting the general rate by 0.07%, and decided against maintaining the general reference rate at 26.5%, which has been increased to 28%.
The new taxes will undergo a trial phase in 2026 before their full implementation in 2027.
