The Chamber of Deputies should soon begin discussions on the new tax reform. In short, this recent Constitutional Amendment Proposal (PEC) changes the way the Brazilian tax collection system works.
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According to the government, the objective of this new tax reform would be to simplify the taxation of citizens and companies. Keep reading and understand some of the most important points on the subject!
Main details of the tax reform
The big change proposed by the tax reform right now is the unification of five taxes that affect Brazilian consumption.
For this, the document provides for the creation of the Value Added Tax (VAT). Thus, the municipal, student and federal taxes of this mechanism would be united in only one.
Another point worth highlighting is the definition of two stages in the reform. The first is the complete review of taxes on consumption, while the second will focus on the discussion of taxes on people's income. One must be completed for the other to take place.
Furthermore, some products must have a reduced tax rate to 50% in total; are they:
- Food and hygiene products from the basic basket;
- Personal hygiene products;
- Medicines and medical devices; health services;
- Public urban or semi-urban public transport;
- education services;
- Agricultural, fishing or extractive products and inputs;
- National artistic and cultural activities.
In addition to these, there are items that should have taxes zeroed by the new tax reform. Some medicines, higher education services and related to small producers as well.
Finally, another important detail of the tax reform is the possibility of having cashback in tax. Some vulnerable people will have part of the amount paid in taxes returned, for example.
Overview
The text of the reform foresees the beginning of the application of the changes in 2026, with the unification of federal taxes at a rate of 1%. In the following year (2027) the contribution on goods and services, the extinction of PIS and Cofins and also the end of the IPI will come into effect.
Between 2028 and 2032, the government should put into practice the reduction and unification of taxes on people's consumption.
In the second semester, taxation of income and assets will be discussed according to the tax reform. So far, what is known is that jets and yachts will have to pay IPVA, inheritances and donations will have different taxation.
The IPTU will have municipal updates and the Income tax has yet to be widely discussed. Finally, the text of the proposal still needs to be voted on and will probably undergo several adjustments until it is applied. That's what analysts expect.