Page 11 - ENGLISH MONTT GROUP, MAYO 2024

MONTT GROUP MAGAZINE - 2024
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the chanGe took
30 años
27%
tHe HiGHeSt vat in tHe WorLD
this vat repLaces 3,500 taxes
Even so, the Legislature wanted a more widespread reform, with deeper and more relevant transformations, especially in terms of Income Tax and more controversial issues, such as the tax on people with higher incomes and dividends.
This regulation will come into force gradually over eight years, starting in 2026, and it is anticipated that some rules could take up to 50 years to be fully implemented. Experts maintain that, at least in 2033, business organizations will see the number of hours spent paying taxes reduced by at least half.
Multiple Details:
•The current five consumption taxes are replaced, which were created gradually since the introduction of the current Constitution and which in 2019 collected 12.43 percent of the Gross Domestic Product (GDP).
•These will be replaced by two almost identical VATs called the Goods and Services Tax (IBS, federal government) and the Goods and Services Tax (CBS, states and cities). They share exactly the same rules, with the same tax base, final consumption, differing only in the destination of their procedures.
This constitutes a significant departure from the selective and cumulative nature of the old taxes, when each had a specific tax base (for example, manufactured goods versus services) and often integrated the tax base of the others. Thus exports are effectively exempt, since taxes paid on inputs can be
VIDEO: REPORTAjE REFORMA TRIBUTARIA EN BRASIL
refunded and harmonized tax codes eliminate the regional and sectoral compliance efforts necessary under the previous system.
•The tax reform explicitly determines that the general VAT rate must be calculated to preserve the average tax revenue generated by the five taxes replaced in the period 2012-2021 as a proportion of the Gross Domestic Product (GDP). Thus, a simple division yields the rate necessary to meet these demands when considering the exempt sectors.
This regulation will come into force gradually over eight years, starting in 2026, and it is anticipated that some rules could take up to 50 years to be fully implemented.
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