The regulation of tax reform as was sanctioned this Wednesday (16) should result in a Average Value Added Tax (VAT) of 28% in Brazilaccording to an estimate presented by extraordinary secretary for reform, Bernard Appy.
The tax would lead the country to to surpass a tax rate load applied in Hungary (27%)thus taking the pole position no podium of the highest taxes in the world.
However, during its first passage through the Chamber of Deputies, the regulatory text gained a new mechanism that should prevent this from happening: .
The device serves to do exactly what the name suggests: prevent the general tax rate from exceeding a certain level. In this case, the established level is 26.5%.
The average taxpayer, when faced with this number, is usually surprised by the expected burden of post-reform taxes. However, the proposal for the reform – and the lock – is to ensure that the current tax burden does not increase or decrease.
Why can Brazil have the highest tax in the world?
During the processing of the tax reform regulatory project, a series of .
According to Appy, the was what had the greatest influence on the average load rising from 26.5% for . At the time of the procedure, the rapporteur, senator Eduardo Braga (MDB-AM), sought to embrace – partially or fully – .
The secretary states that the changes that had the greatest impact on the rate were rejected when the text returned to the Chamber of Deputies.
However, he recognizes that the final tax should be “a little higher” than estimated during the project’s first passage through the hands of federal deputies.
Sanctioned text
President Lula sanctioned the complementary bill that regulates tax reform.
The proposal determines rules on the new taxes created by the reform, the Contribution on Goods and Services (CBS), which is federal, and the Tax on Goods and Services (IBS), which has state and municipal jurisdiction.
CBS will replace PIS, Cofins and IPI, while IBS will be charged instead of ICMS and ISS.
The project also defines details about the Selective Tax (IS), known as the “sin tax”, which is levied on items considered harmful to health and the environment.
The topic was one of the government’s priorities. Approval was also one of the commitments of the presidents of the Chamber, Arthur Lira (PP-AL), and of the Senate, Rodrigo Pacheco (PSD-MG), who will leave their positions on February 1st.
