- Broadening the VAT Base: Brazil’s tax reform aims to expand the VAT base by including margin-based financial services and real property transactions, addressing inefficiencies and distortions associated with previous exemptions and reduced rates typically seen in other jurisdictions.
- Financial Services Model: The reform introduces a dual approach for financial services, applying VAT to fee-based services under a transaction-by-transaction method and using an accounts-based method for margin-based services, allowing for input tax credits to mitigate distortions and ensure neutrality.
- Real Property Taxation: The reform subjects the sale and rental of real property to VAT, with specific conditions for registration based on revenue thresholds. It includes a progressive tax structure with reduced rates for newly built residential properties and a deduction to alleviate the tax burden, promoting equity and addressing complexities in real estate transactions.
Source: kluwertaxblog.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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