| By Guilherme Martins and João Pedro Riccioppo Cerqueira Gimenes* Last week, the Federal Senate approved, in 2 Rounds, the Tax Reform on Consumption – Proposed Amendment to the Constitution No. 45 (PEC No. 45), which, despite the various exceptions and regimes favored in the text, maintains its elementary characteristics, when it comes to the implementation of the Value Added Tax (“VAT”) in Brazil. The solution sought by the Reform consists, in short, of the conversion/unification of 5 taxes existing in our tax system, namely: PIS, COFINS, IPI, ICMS and ISS, into 3 new taxes. They will be replaced by a “Dual VAT”, which will be composed of the Contribution on Goods and Services (“CBS”), under the jurisdiction of the Union, and the Tax on Goods and Services (“IBS”), managed by the Federative Council, which is composed of the States and Municipalities, in addition to a Selective Tax (“IS”), which will be levied on goods and services that are harmful to health and the environment. The new taxes will be levied on transactions and imports involving tangible or intangible goods, including rights, or services, and their main characteristics are full non-cumulativeness, a broad tax base and collection at the destination. The following are explained: Full non-cumulativity consists of the possibility of offsetting the tax through unrestricted crediting, with the exception of acquisitions for personal use or consumption, as well as for exempt transactions or transactions subject to immunity. It is broadly based on the principle that includes all material and immaterial goods, including rights and services, and that it will be calculated “extra”. The destination principle advocates collection on consumption, or rather, focused on the final consumer, rather than at the place of origin of the product or service. Now, given that the original text underwent several changes in the Senate, the PEC must return to the Chamber of Deputies for a second deliberation/assessment. It is known that the Federal Government intends – and has planned in this sense – to definitively approve the Reform this year, 2023, which means that the strong political movements for the final processing of the text will be maintained in the coming weeks. Our team will continue to closely monitor developments on this topic and is available to provide any clarifications. *With the collaboration of Pedro Antônio GM Buzas |
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