The deputies approved the urgency of the text on Monday; there were 308 votes in favor and 142 against.
The Chamber of Deputies will hold a plenary session this Tuesday (13.Aug.2024) to vote on the PLP 108 of 2024which defines administration rules for the IBS (Tax on Goods and Services) Management Committee for states and municipalities.
On Monday (12.Aug) the deputies approved the urgency of the text. The text received 308 votes in favor and 142 against.
The project is a priority for the government and the president of the Chamber, Arthur Lira (PP-AL), who wants to complete the regulation of the reform in 2024, before finishing his term as head of the House.
The approval of the text this year is a promise made by the deputy from Alagoas to the Minister of Finance, Fernando Haddad.
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UNDERSTAND THE MANAGEMENT COMMITTEE
The State and Municipal Tax Management Committee, the IBS (Tax on Goods and Services), will be responsible for collecting, offsetting debts and credits, and distributing revenue to States and municipalities.
The body is divided into 7 bodies. The main one, the Superior Council, will have 27 representatives from each State and another 27 for the municipalities.
It will adopt mechanisms to control the credit and debit system and will have 7 instances:
- Superior Council;
- Executive Board;
- Technical directorates;
- General Secretariat;
- Institutional and Interfederative Relations Advisory;
- Internal Affairs; and
- Internal Audit.
REGULATION NOVEL
The main text of the tax regulation (PLP 68 of 2024) was approved on July 10 after around 10 hours of voting.
During the vote on the highlights in the Chamber, that is, suggestions for the project, there was a problem with including meat in the list of foods with 100% tax exemption.
The president Luiz Inácio Lula da Silva (PT) was in favor, but Haddad was against. He preferred to expand the cashback for the poorest population.
The section was strongly articulated by the opposition and the agribusiness caucus. After pressure, the government gave in.
PLP 68 is now in the Senate and, although it is under urgency, senators are trying to remove the device due to disagreements with the Chamber’s version.
In total, there will be 3 texts: 2 complementary bill projects (these are already in Congress) and 1 ordinary bill.
The complementary ones deal with:
- specifications common to IBS and CBS (Tax on Goods and Services) – Contains definitions of all specific and differentiated regimes of federal, state and municipal taxes. It also discusses selective taxes;
- IBS specifications only – will define the format of the tax management committee. It addresses the transition from the current ICMS (Tax on the Circulation of Goods and Services) to the new rate.
The 3rd text – in the form of a bill – should detail how the transfer of resources to the Regional Development Fund will be made as compensation for tax benefits.
HISTORICAL REFORM
In short, the main change proposed by the consumption tax reform is the creation of VAT (Value Added Tax) to unify a series of tax rates. The objective is to simplify the collection system in Brazil.
The change is expected to come into effect by 2033. It was instituted through a PEC (Proposed Amendment to the Constitution), approved by the National Congress in December 2023.
Brazil has 5 taxes on consumption that will be unified by VAT:
- IPI (Tax on Industrialized Products);
- PIS (Social Integration Program);
- Cofins (Contribution to the Financing of Social Security);
- ICMS;
- ISS (Service Tax).
Dual VAT will consist of:
- CBS – the merger of IPI, PIS and Cofins. It will be managed by the Union (federal government);
- IBS – unifies ICMS and ISS. It will have shared management between states and municipalities.
THE Poder360 prepared a report that explains in detail the tax reform and the changes it will bring to citizens’ daily lives. Read it here.
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