Medicines, fruits, eggs: see the list of items that may be exempt in the tax reform

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A good part of the decisions will still be taken in a supplementary law, which will specify items left open by the Proposed Amendment to the Constitution (PEC) approved last Friday. Chamber approves text of tax reform in 2nd round The tax reform, a project that changes the way taxes are collected in the country, advanced in the Chamber of Deputies in the early hours of this Friday (7). The text of the Proposed Amendment to the Constitution (PEC) that establishes the bases for the transformation of the tax system had 375 votes in favor, 113 against and three abstentions. The central objective of the reform is to simplify charging with the creation of two Value Added Taxes (IVAs), which replace five federal, state and municipal taxes. But a good part of the decisions will still be taken in a complementary law, which will specify items left open by the PEC. One of these themes is the possibility of exempting the collection of VAT on a series of goods and taxes. See below the list of items that may be exempt from the future VAT charge: some specific medicines, such as those used for the treatment of cancer basic care products for menstrual health medical devices and accessibility for people with disabilities vegetables, fruits and eggs 100% reduction in the federal VAT rate (called CBS) levied on higher education education services (Prouni) possibility for a rural producer, individual or legal entity with annual revenue of up to R$ 3.6 million, to be “free” to collect future VAT Possibility of zeroing VAT on urban rehabilitation activities in historic areas and critical areas of urban recovery and reconversion In addition to exemptions, products and services may be part of three other categories, which will define the size of the tax rate will have to pay. They are: Exempt; Reduced rates; General rate; Excise tax, or “sin” tax; READ MORE Tax reform: what should change in IPVA and IPTU charges Free basic basket, ‘cashback’ and IPVA for jets: see the main points Find out what should change in IPVA and IPTU charges with the tax reform Reduced rates During the negotiations for the approval of the reform on Friday, the rapporteur, deputy Aguinaldo Ribeiro (PP-PB), brought updates to the devices that deal with the reduction of the rates of the two VATs for certain goods and services. He added three more sectors to the roster. There was also a change in the percentage of tax rate reduction. Originally, Ribeiro had proposed a 50% reduction. The PEC now establishes a 60% cut. With this, the incident rate will be equivalent to 40% of the IBS (state and municipal VAT) and the CBS (federal VAT). The rapporteur had initially proposed the possibility of cutting the taxation of the following list: public urban, semi-urban or metropolitan transport services medicines and medical devices and health services education services agricultural, fishing, forestry and extractive plant products in natura agricultural inputs, food intended for human consumption and personal hygiene products and national artistic and cultural activities Ribeiro’s list of products and services included, in addition to journalistic, audiovisual and sports productions: medical devices and accessibility devices for people with disabilities, goods and services related to safety and national sovereignty, information security and cybernetic security, and medicines and basic menstrual health care products. In the version presented two weeks ago, Ribeiro established the possibility for urban, semi-urban or metropolitan public transport services. It proposes the expansion to “public road, rail and water transport, of an urban, semi-urban, metropolitan, intercity and interstate nature”. How are taxes with the tax reform Art g1 General rate The text of the tax reform does not establish the amounts for charging VAT. According to Ribeiro’s opinion, the IBS and CBS reference rates should be readjusted to “incorporate the loss of revenue from extinct taxes”. The objective is to keep the tax burden in each federative sphere unchanged. In general, the text establishes that the rates of the two new taxes will be those “necessary to replicate the current tax burden”. The extraordinary secretary for tax reform at the Ministry of Finance, Bernard Appy, has already estimated that the future VAT rate, necessary to maintain the tax burden, would be 25%. Tax of ‘sin’ The proposal foresees the creation of a selective tax, of federal competence, on goods and services harmful to health and the environment (such as cigarettes and alcoholic beverages). The tax may be levied on one or more stages of the production chain – for example, production and marketing – and will be charged on imports, not on exports. The details of the charge and the products that will be discouraged by the tax will be defined later. Although the tax is federal, the collection will be shared with states and municipalities, following the current distribution of the Tax on Industrialized Products (IPI). In this Thursday’s report, Ribeiro also proposed that the selective tax not be applied to goods that will have reduced rates, such as agricultural production.

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