Brazilian VAT ICMS tax reform falls over

Plans to simplify one of the most complex indirect tax regimes in the world has stalled as Brazil fails to agree on intra-state sale tax regimes.

Currently, Brazilian VAT ICMS is set be the individual 26 federal states. As a result, the rules are confusing, and rates vary from between 7% and 12%. For several years, the state government has been attempting to align all regions at 4%. This required to the creation of a complex compensation fund.

However, this month, plans to introduce the new, single rate for 2014 were scuppered and now face a long, further delay.

Brazil is facing similar problems to India, which is also trying to align its states around a single Indian GST regime.

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