The key changes proposed by PLP No. 68 in Brazil, which is part of the broader tax reform efforts, include the introduction of a new indirect tax system. Here are some of the significant changes:
- Introduction of Dual VAT System: The bill proposes a dual VAT system consisting of a federal VAT (CBS) and a state and municipal VAT (IBS), along with a new federal excise tax (IS).
- Definition of Goods and Services: The bill defines “goods” as material or immaterial, including rights, and “services” as any operation not defined as goods, thus covering any consumption transaction.
- Supplier and Purchaser Definitions: It specifies “supplier” as the entity performing the supply service, and “purchaser” as the one obliged to provide payment for the supply of goods or services.
- Phased Implementation: The new tax system will be implemented over a seven-year period, starting in 2026 and fully replacing the current system by 2033.
- Expected VAT Rate: The Ministry of Finance anticipates an average dual VAT rate of 26.5%, although the exact rate will be determined through future legislation.
These changes aim to simplify the tax system and make it more efficient. The proposed text still needs to be analyzed by the National Congress, which will also consider other related bills.
Source
