Basic Text of Tax Reform in Brazil Approved

On July 10, the House of Representatives passed the core text of the first Brazilian Tax Reform regulation, which is now to be approved by the Senate. The tax reform is designed to streamline the tax system by consolidating several existing taxes into fewer, simpler consumption taxes, making the system more efficient and fair. The main points include tax-exempt basic food items, three new consumption taxes replacing five existing ones, a standard VAT rate of 26.5%, maintaining the overall tax burden, eliminating cumulative taxation, and a cashback system for domestic expenses. The Brazilian government aims to implement the tax reform by 2033, with the transition starting in 2026.