Tax reform approved in the Chamber guarantees incentives for the ZFM

Brasilia -The Chamber of Deputies approved this Thursday night (6), in the first round, the basic text of the tax reform.
The measure passed with broad support from deputies. There were 382 votes in favor, 118 against and 3 abstentions.

If it passes the House, the text goes to the Senate for consideration.
The rapporteur for the reform, Deputy Aguinaldo Ribeiro (PP-PB), presented the final text of the Proposed Amendment to the Constitution (Pec) of the reform moments before the vote.

Project guidelines

The final opinion changed the “reduced rate” of the Value Added Tax (VAT).

For benefited sectors, which will not pay the “full” amount, the figure will be equivalent to 40% of VAT (previously it was 50%).

In addition, rules were presented for the Federative Council, which will be responsible for managing the IBS — a subnational tax that will result from the merger between the ICMS and the ISS.

To meet the demands of governors from the South and Southeast, the rapporteur defined that the Council’s decisions will need to be approved by representatives representing more than 60% of the country’s population.

In order to contemplate large municipalities, the rapporteur defined that the composition of the Council will take into account the population.
Thirteen of the 27 seats to which municipalities are entitled will be filled taking this criterion into account.

Also benefiting municipalities, the text extends until 2032 the untying of 30% of municipal revenues and expands the possibilities of applying the resources of the contribution to public lighting (COSIP).

“Background” for ZFM

The newsroom also creates a “fund” to encourage the development of economic activities in the Amazon. In addition, it indicates that the Selective Tax (IS) will tax goods manufactured in other regions of the country that are also produced in the Manaus Free Trade Zone — ensuring an incentive for ZFM operations.

Aguinaldo Ribeiro had already presented, in an opinion released on Wednesday (5), changes to the proposal. The main one was the creation of the “Basic National Food Basket”, which will have a zero rate. The items that make up the basket will be regulated by a supplementary law.

The new opinion also included items and sectors among those that will pay a reduced rate of Value Added Tax (VAT). Menstrual health products and devices for people with disabilities (PCD) were included, for example.

With the opinion of the rapporteur, the matter also began to provide for the annual review of VAT rates to prevent the increase in the tax burden.

The backbone of the proposal

The text is a replacement for Pecs 45 and 110, which were processed in Congress and were the subject of discussions in the Working Group (GT) on Tax Reform of the Chamber.

The implementation of a dual VAT — that is, divided between two taxes, one national (CBS) and the other subnational (IBS) — that replaces five existing taxes (PIS, Cofins, IPI, ICMS and ISS) is the backbone of the proposal .

Experts estimate that this new unified tax should be 25%, but the rate is not defined and will be regulated after studies by the Federal Revenue Service. The figure should be enough to keep the collection in proportion to the current GDP.

The matter is that some sectors, products and services will have a differential rate, which will be equivalent to 50% of the “full” VAT rate.

The text also makes room for, based on a complementary law, tax exemption for education services from the University for All Program (Prouni) and services benefited by the Emergency Program for the Resumption of the Events Sector (Perse).

The new bill details two transitional rules for moving from the current tax system to the new one. Both the new federal tax (CBS) and state/municipal tax (IBS) will already have a rate from 2026.

The complete transition, with replacement of current taxes by dual VAT, will take place in 8 years, between 2026 and 2032. During this period, the necessary rate for CBS and IBS necessary to maintain the current tax burden will be tested.

Regarding the transition from tax collection from origin to destination, it will be staggered over 50 years, between 2029 and 2078.

*With information from the CNN website

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