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Brazil caps ICMS on fuel, electricity and public transport on inflation worries

11.9% inflation prompts Brazil to limit ICMS (VAT) on range of supplies to 18%; states to challenge as unconstitutional

Brazil has limited states freedom (Complementary Law 194/2022) to charge ICMS above the standard rate of 18% on a range of supplies, including

  • Petrol and fuel
  • Natural gas
  • Electricity
  • Public transport

Generally, states may only charge 17% or 18%. A number of states will challenge the cap as unconstitutional. ICMS on these supplies accounts for around 25% of many states’ total tax revenues

ICMS, Imposto sobre Operações Relativas à Circulação de Mercadorias e Serviços de Transporte Interestadual e Intermunicipal e de Comunicações – is an indirect tax which applies to the movement of goods, transportation, communication services and other general supplies of goods. The current tax level is between 7% and 25%

Brazil VAT reform has been attempted many times, with a bill in the Senate at the moment.


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