Minister Fernando Haddad (Finance) submitted the first tax reform regulation proposal to the National Congress on Wednesday (24). The complementary law project deals with the general rules of operation of the new taxes, the federal CBS (Contribution on Goods and Services), the IBS (Tax on Goods and Services) of states and municipalities, and the IS (Selective Tax).
In a press conference after the act, the extraordinary secretary for Tax Reform, Bernard Appy, said that, with the draft of the bill, the rate of the new VAT (Value Added Tax) would be between 25.7% and 27.3%, with an average of 26.5%. "I would say the reference is the average," he stated. If this level is confirmed, the Brazilian rate will be among the highest in the world for a VAT. Currently, the highest of its kind is Hungary's, at 27%.
It was not in the plans of the Ministry of Finance to disclose the rates now, but the economic team was alerted that this would be one of the first demands from deputies at the beginning of the project's processing. When the reform was promulgated at the end of last year, the government chose not to disclose the new calculations, despite the insistence of various business sectors.
Last year, the government estimated a rate of up to 27.5%, but the updated average value turned out slightly lower than previously expected because some items in the regulation project became stricter. In practice, this means stricter rules for differentiated or reduced rate regimes. It is the first time the government has disclosed the average of the rate variation band, which is considered the most feasible point.