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Brazil VAT implementation

The Brazilian Chamber of Deputies is considering a bill (PEC 294/2004) to implement a Value Added Tax regime, consolidating a range of federal, state and municipal indirect taxes. Brazil's indirect tax regime is frequently cited as the most complex in the world, with federal and 26 state varying rules.

The new consolidated federal tax, Imposto Único sobre Bens e Serviços(‘IBS’) will take a total of 10 years to introduce. It will first require approval by parliamentary commissions before progressing.

IBS would be levied on the supplies of goods and services, including intangible services.

Combining taxes into IBS

IBS will replace several different consumption taxes:

  1. ICMS – state tax on the movement of goods; also levied on communication supplies
  2. COFINS – federal tax, funding social security
  3. ISS – municipal tax on services
  4. PIS – federal levy for social integration
  5. IPI – federal tax on industrial goods

10-year implementation plan

Initially, COFINS and IBS will be reduced to 2% for two years. In the following 8 years, the other taxes will all be gradually reduced to a single rate for the full launch of IBS.

Latest Brazilian news

What can we expect from the Brazilian Tax Reform

February 23, 2019

With the transition of Government at the beginning of this year, much has been said about the possible tax changes that the Federal Government will propose in order to increase revenues.

Brazil VAT implementation proposals

January 19, 2019

The Brazil Special Committee on Tax Reform has published details of its proposal to replace the existing range of indirect taxes with a world-standard Value Added Tax regime

Brazil ponders VAT implementation

November 23, 2018

Brazil’s new President-elect, Jair Bolsonaro, has said he is considering introducing a Value Added Tax (VAT) in a bid to streamline the existing ICMS, ICI and other complex indirect taxes

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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