By Luiz Carlos Benner
On July 7, 2023, the Substitute of the Constitutional Amendment Proposal (PEC) No. 45/2019, which provides for the Consumer Tax Reform, was approved by the Chamber of Deputies.
The PEC will now go to the Federal Senate. A Working Group composed of 9 senators will consider the text initially and then send it to the Senate Plenary. Approval will depend on three-fifths, representing 49 senators.
The main changes are the extinction of 5 taxes (ICMS, IPI, PIS, Cofins and ISS) and the creation of three new taxes, namely: federal Contribution on Goods and Services (CBS), state and municipal Goods and Services Tax (IBS), and federal Selective Tax (IS).
The record approval of the proposal, by the Chamber of Deputies, brought a series of concerns to businessmen in general. There is still a long way to go before the reform is implemented. If it were not enough to require approval by the Senate, many important points still need to be defined. One of them is precisely the definition of the rates. In addition, it will be necessary for the government to make its own adjustments to be able to oversee and allow taxpayers to hand over ancillary obligations.
What is already defined is the transition period, which will begin in 2026 and will be completed in the year 2033, when the new consumer tax system will be fully adopted. The ICMS, for example, will start to change in 2029 and the benefits of ICMS and ISS are expected to be completely extinct in 2032.
Although the Government is sending a message that there will be a reduction in the tax burden, what we have seen in recent years has been the increase in the tax burden in general and, even if some sectors end up having some type of reduction in their tax burden, others, such as the service sector, will certainly experience an increase in the burden. Despite many uncertainties, this time, the reform will apparently get off the ground. It remains to be seen who will be the major beneficiary.
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