On 20 December 2023, Brazil passed Constitutional Amendment No. 132 of 20 December 2023, introducing major indirect tax reforms. These reforms will replace or unify several existing
indirect taxes with new tax measures.
The taxes that are replaced/unified are as follows:
- the federal contributions for social integration (PIS)
- the social security financing (COFINS)
- the federal tax on manufactured products (IPI)
- the state value-added tax (ICMS)
- the municipal service tax (ISS)
The newly announced taxes are as follows:
- the contribution on goods and services (CBS)
- the tax on goods and services (IBS)
- federal selective tax (IS)
As per the newly passed legislation, there will be specific rate reductions for CBS and IBS, such as a 60% reduction for education, health services, medical devices, medicines, agricultural inputs, agricultural and aquaculture inputs, national artistic, journalistic and audiovisual productions, sporting activities, goods and services related to sovereignty and national security, public transportation services, and more.
The complementary law will establish the operations benefiting from a reduction of 30% in the tax rates in services related to the provision of intellectual and professional services of a scientific, literary, or artistic nature.
The new indirect tax system will be implemented in phases starting in 2026 and ending in 2033.