VAT Brazil: Overview of the main points of the tax reform and next step

On 20 December 2023, Brazil approved brand-new legislation on consumption and transactional taxation. The main objective of the legal modifications is to simplify a host of levies on goods and services. After a transition period of 7 years (from 2026 to 2032), taxation will be based on a dual VAT system. The Ecovis experts explain the details of the VAT tax reform.

The most important changes

• Five separate consumption taxes to be replaced by CBS (federal tax) and IBS (state and municipal tax)
• Creation of an excise tax – levied only on products harmful to health or the environment
• A single tax rate, to be defined by future legislation (however, there are some exceptions)
• General taxation covering all operations with goods and services

We support international companies wanting to take advantage of the more favourable tax conditions in Brazil and invest here.

Mauricio Santos Nucci, Senior Partner in the Tax Law Department, Vaz de Almeida Advogados – Member of ECOVIS International, São Paulo, Brazil

For more information about all the changes, please download the PDF to see the details prepared by the local Ecovis lawyers:

Although approved, there are several aspects still to be defined by a complementary law that will be forwarded to the Brazilian National Congress. Among these, the tax rate is the most anticipated. According to the government, this could be around 27.5%, but it will be defined according to government revenue expectation and the granting of special regimes.

In addition, the approval of the consumption tax reform established a deadline of 90 days for the submission of the bill to reform income taxation.

It is a well-known fact that Brazil intends to simplify its taxation system, which is seen internationally as a barrier to doing business in the country. With this in mind, it is expected that the reforms will create a better commercial environment with the aim of bringing more investors to the country, explain the Ecovis experts.

For further information please contact:

Mauricio Santos Nucci, Senior Partner in the Tax Law Department, Vaz de Almeida Advogados – Member of ECOVIS International, São Paulo, Brazil
Email: mauricio.nucci@vazdealmeida.com