Over the past few months, Tungsten has been monitoring Brazil’s piecemeal approach to significant tax reforms in the country. The scale of the proposed changes is substantial and signals a new era of fiscal strategy in Brazil.

Part of the proposed changes included the introduction of a new VAT rate which aligns Brazil’s VAT system more tightly with international standards.

To this effect, the lower House of Parliament has approved a consolidated tax rate of 26.5%, which represents a combination of a new set of taxes: Goods and Services Contribution (CBS) and Goods and Services Tax (IBS). Senate approval is still required for progression.

The Bill marks the transition to a new VAT system, and effectively replaces former state and federal taxes. In doing so, Brazil strives to simplify the challenges associated with what is arguably regarded as one of the most complex tax regimes in the world.

You can read more about e-invoicing in Brazil here.