Brazil’s government has submitted regulations to Congress regarding implementing a new dual value-added tax (VAT) system as part of its tax reform bill.
Earlier, Brazil’s lower house of Congress, on 10 July 2024, passed legislation to overhaul the tax system. This follows after lawmakers demanded Brazil implement major tax reforms to improve productivity by simplifying Brazil’s complicated taxation regime and reducing the cost of doing business.
The rules mandate that residents and non-residents conducting business in Brazil will need to follow the new compliance rules, including the indirect tax obligations for non-resident sellers and digital platforms.
The transition to the dual VAT system is planned to be fully implemented over seven years, as outlined below:
- 2026: Implementation of the CBS rate at 0.9% and the IBS rate at 0.1%;
- 2027: Phasing out of PIS, COFINS, and IPI;
- 2029: Gradual reduction of ICMS and ISS;
- 2033: Establishment of final rates, projected to be around 28%.
The Brazilian government also released initial changes regarding electronic invoices for goods issued by local taxpayers.
The Technical Note NT 2024.002, version 1.00, specifies new field groups that must be included in electronic invoices for goods (NF-e model 55) and those intended for final consumers (NFC-e model 65). The NT 2024.002 version 1.00 introduces ECONF, enabling the integration of financial transactions with the processes of Goods Electronic Invoices (NF-e) and Electronic Consumer Invoices (NFC-e).
