In total, 383 active ingredients and vaccines fall under the regime; the government submitted a proposed reform regulation this Wednesday
The president's government Luiz Inácio Lula da Silva (PT) presented this Wednesday (April 24, 2024) to Congress the main proposal for regulating tax reform. The document contains a list of 383 medicines, active ingredients and vaccines that may have a zero rate under the new rule.
Among the substances is sildenafil citrate, the main compound in Viagra. The project also covers vaccines against covid, dengue and tetanus. Read here list complete (PDF – 79 kB).
read here the full text of tax reform regulations (PDF – 5 MB).
THE REGULATIONS
The Minister of Finance, Fernando Haddaddelivered the main text personally to the presidents of the Chamber of Deputies, Arthur Lira (PP-AL), and the Senate, Rodrigo Pacheco (PSD-MG).
In total, there will be 3 texts: 2 complementary bills and 1 ordinary bill.
The supplements will deal with:
- specifications common to IBS (Goods and Services Tax) and CBS (Contribution on Goods and Services) – will have definitions of all specific and differentiated federal, state and municipal tax regimes. It also talks about the selective tax;
- IBS-only specifications – will define the format of the tax management committee. Addresses the transition from the current ICMS (Tax on the Circulation of Goods and Services) to the new rate.
Only the 1st text is in the hands of the Legislature. It is considered the main one, as it contains technical specifications, which tend to be more negotiable with deputies and senators.
The 3rd text – in ordinary law format – must detail how the transfer of resources to the Regional Development Fund will be made as compensation for tax benefits. It's also for later.
The tax regulations were delivered late. The complementary bills were expected to be sent to the Legislature by April 15. Haddad traveled to Washington, in the United States, for a meeting of the G20, the group of the 20 largest economies in the world.
The economic team said that the texts would be delivered to the deputies even with the trip, which did not happen.
The National Congress enacted in December 2023, in a solemn session, the tax reform, debated for around 40 years in the Legislature. Approving tax reform in 2023 was one of the government's priorities.
UNDERSTAND TAX REFORM
In summary, the main change proposed by the consumption tax reform is the creation of 2 VATs (Value Added Tax) to unify a series of rates. The objective is to simplify the billing system in Brazil.
The change should come into force by 2033. It was instituted through a PEC (Proposed Amendment to the Constitution), approved by the National Congress in December 2023. Due to the nature of the constitutional amendment, tax regulation, with the details of the new system, needs to be done via bills (whether complementary or ordinary bills).
Brazil has 5 taxes on consumption that will be unified by VAT:
- IPI (Taxes over industrialized products);
- PIS (Social integration program);
- Cofins (Contribution to Social Security Financing);
- ICMS (Tax on Circulation of Goods and Services);
- ISS (Tax over services).
The dual VAT will consist of:
- CBS (Contribution on Goods and Services) – the merger of IPI, PIS and Cofins. Managed by the Union (federal government);
- IBS (Goods and Services Tax) – unifies ICMS and ISS. It will be managed shared between states and municipalities.
O Power360 prepared a report that explains in detail the tax reform and the changes it will bring to citizens' daily lives. Read here.
Read more about tax reform regulations:
#Tax #proposes #rate #Viagra #substance