The Constitution and Justice Committee of the Federal Senate is expected to vote this Wednesday (16) on the Proposed Amendment to the Constitution 110/2019, which deals with the reformulation of the Brazilian tax system. The proposal simplifies indirect taxes, levied on consumption and production.
For this, the Value Added Tax (VAT) will be created, with the creation of two taxes: one of competence of states and municipalities, called IBS, and another of competence of the Union, called CBS. CBS will replace Pis/Cofins.
The rapporteur Senator Roberto Rocha extended from 20 to 40 years the transition period for the IBS, substitute for ICMS and ISS. This could lower the value of fuels, since the text includes that fuels may be subject to different tax regimes. With this, there would be a single-phase charge of the IBS in a fixed amount per liter is the same throughout the national territory.
The IBS is one of the two taxes provided for in the institution of a dual value added tax (VAT) model. The IBS is the result of the merger of ICMS (state) and ISS (municipal), for states and municipalities, and will comprise the Subnational VAT.
The proposal’s rapporteur also suggested that the IBS begin to be implemented in the year in which it is regulated by the federative council if the rules are published by June 30, or in the following year, if published later. This tax will also have a single legislation for the entire country, except for the rate, which will be set by each federative entity.
The PEC also authorizes a complementary law to create differentiated regimes with exemption or adoption of reduced rates, total or partial refund of the tax or even changes in the rules to credit the taxpayer. And this should create specific taxation for operations with fuels, lubricants and tobacco products, financial services and operations with real estate, which may be taxed only once. This will also be done with respect to the provision of financial services.
Another important change is that the complementary law may condition the offsetting of tax credits to the payment of the tax due, which “along with automatic withholding, should result in a reduction in evasion and default, making it possible, still according to the rapporteur, to reduce tax rates” of the IBS”, evaluated the rapporteur in the document.
Source: CNN Brasil
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