Brazil’s Tax Reform: Simplifying System with Dual VAT, Addressing Short-Term Transition Challenges

• Brazil’s first tax reform in over 30 years aims to simplify and modernize the tax system
• Unifies four taxes into a dual Value Added Tax system: CBS (federal) and IBS (state/municipal)
• Introduces a tax on products harmful to health or the environment
• Seeks to reduce red tape, enhance compliance, and promote economic growth
• Short-term challenges include managing old and new tax systems simultaneously
• IBS and CBS rates are yet to be set, creating uncertainty
• Updating accounting and tax systems will raise short-term compliance costs
• Current system is complex with overlapping federal, state, and municipal taxes
• Reform consolidates taxes into CBS and IBS, reducing declarations and payments
• Benefits include clearer obligations and fewer conflicts
• Implementation overseen by the Steering Committee per CF/88 and LC 214/2025

Source: fiscal-requirements.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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