government estimates average rate of 26.5% with new taxes

The Minister of Finance, Fernando Haddad (PT)delivered yesterday (24) the first complementary bill that deals with the regulation of tax reform to the Chamber of Deputies. The text presented to deputies deals with the general rules for applying new taxes: the federal CBS (Contribution on Goods and Services), the IBS (Taxes on Goods and Services) of states and municipalities, and the Selective Tax (IS).

In a quick interview after delivering the text to the president of the Chamber of Deputies, Arthur Lira (PP-AL), the extraordinary secretary for Tax Reform at the Ministry of Finance, Bernard Appy, said that, due to the design of the bill, the tax rate Value Added Tax (VAT) that will replace current federal and state taxes should range from 25.7% to 27.3%, with an average of 26.5%.

“This is what the simulation indicates” said Haddad, who in addition to Appy went to the Chamber accompanied by the Executive Secretary of Finance, Dario Durigan. The minister emphasized that “the VAT rate forecast is the same as the last study we forwarded”. And he also said that the rate will depend on exceptions (which push for a higher number) and the reform’s digitalization system (which can expand the base and bring more efficiency to the system and contribute to reducing the number).

The minister and the secretary avoided going into details and limited themselves to saying that the text of the first draft regulation of the reform will be scrutinized this Thursday, during a press conference. Haddad also noted that the text of the tax reform regulatory project would enter the Chamber system last night to facilitate parliamentarians’ access to the proposal.

Calhamaço

The regulatory project delivered yesterday to the Chamber of Deputies has around 500 articles and 360 pages. “It is big, because it deals with very specific issues, of transition, as it is calculated. But the basic rule is actually relatively small. The text that 99% of companies will need to know is quite short”, stated Appy, earlier this week.

General law

According to the minister, the regulatory project brings the solution to one of the “tangled” Brazilian problems, which is the tax system, currently among the 10 worst in the world. In a note, the Ministry of Finance highlighted that the complementary bill (PLP) delivered to Congress contains most of the rules that regulate the tax reform on consumption, enacted in December last year. The text was dubbed the “General Law on IBS, CBS and Selective Tax (IS)”.

The second project, detailing IBS management, will be presented at the beginning of May.