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Brazil to progress Federal VAT reform

The Brazilian National Congress is to progress the merger of its PIS and COFINS federal taxes under Bill No. 3,887/2020, National Congress. This seeks to introduce the first major simplification of possible the world’s most complex indirect tax regime.

UPDATE 2022: Brazil VAT reform gets Senate backing

The replacement Contribuição sobre Bens e Serviços ‘CBS’ would be set at 12%, with a special tax on e-commerce. This would create a dual VAT system, similar to Canada’s GST and HST regime. Whilst complex, it would not require the states and municipalities to approve constitutional reforms.

The other federal tax, IPI, would be reformed at a later date. The state and municipal level taxes, ICMS and ISS, would be unaffected.

This proposal was an initiative launched in July 2020 following the faltering efforts of two bills to merge all consumptions taxes – state, federal and municipal – into a single tax.

You can check the right VAT or GST calculations on individual or batch transactions with our Advisor and Auditor services.

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