The long-awaited tax reform to implement a VAT system in Brazil was finally enacted after more than 35 years of discussions and several failed attempts. The main issue that prevented its approval since the late 80’s was the conflict of interest between the Federal entities. Brazilian Constitution shares the jurisdiction to tax consumption between the three levels of government – Federal, State and Municipal. Under the current system, the jurisdiction is shared by fragmenting the tax base: while the Federal government levies broad-base taxes on business turnover (PIS/COFINS) and a tax at the manufacturing level (IPI), States collect tax on sales of goods (ICMS) and Municipalities on the provision of services (ISS)….
Source: kluwertaxblog.com
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