The regulation of tax reform on consumption will bring measures to prevent the rise in the price of medicines. A total of 383 substances, which also includes vaccines, will be exempt from Value Added Tax (VAT). In addition, 850 active ingredients will have their tax rate reduced by 60%.
Among the exempted medicines are, in addition to vaccines against covid-19, dengue, yellow fever, flu, cholera, yellow fever, polio and measles, substances such as insulin (used for diabetes) and the antiviral abacavir (used against HIV ). Sildenaphilia citrate (used to treat erectile dysfunction) will also not pay tax.
Among the active ingredients with a reduced rate are omeprazole (treatment of reflux and digestive ulcers), the anxiolytic lorazepam, the high blood pressure medication losartan, metmorphine (used for diabetes), the anti-inflammatory, anti-allergic and anti-rheumatic prednisone and the sexual impotence medication tadafilia.
The complementary bill regulates the collection of Value Added Tax (VAT). This tax is made up of the Contribution on Goods and Services (CBS), collected by the federal government, and the Tax on Goods and Services (IBS), which is the responsibility of states and municipalities. The government’s expectation is to approve the text by the end of July in the Chamber and by the end of the year in the Senate.
According to the government’s proposal, the average rate will be 26.5%. If there is a 60% reduction in the general rate, medicines with the benefit will only pay 10.6% tax.
Even with regulation, the new tax system will take time to reach citizens’ pockets. The transition from current taxes to VAT will begin in 2026 and will only be completed in 2032. Only in 2033 will the system come into full force.
End of cumulativeness
In a press conference to explain the complementary bill, the extraordinary secretary for Tax Reform at the Ministry of Finance, Bernard Appy, said that the approval of the proposal as sent by the government will allow “a relevant reduction in costs” of medicines. In addition to the reduction or exemption of rates, he highlighted that the end of cumulativity (cascade charging) will result in lower prices.
“Not only because of the rates, but today there is a cumulative nature that will no longer exist. When the medicine with [cobrança de] ICMS [Imposto sobre a Circulação de Mercadorias e Serviços, que vai deixar de existir] goes to a reduced rate, there is a large reduction, from 20% to 10% [na carga tributária]. If [atualmente] It already has a zero rate, it remains exempt, but it gains because it is no longer cumulative”, stated Appy.
