Tax Reform: single rate will depend on exceptions – 7/18/2023 – Market

The Extraordinary Secretary for Tax Reform at the Ministry of Finance, Bernard Appy, said this Tuesday (18) that the single rate to be defined in the Tax Reform project, approved by the Chamber of Deputies at the beginning of the month, will depend on the number of exceptions that will be made to different sectors.

In an interview with GloboNews, Appy also said that, if the variables are favorable, the rate could be around 25%, but that it is not possible to price a number with absolute precision at the moment.

According to a technical note from Ipea (Institute of Applied Economic Research), the effective rate of the new Brazilian tax to tax the consumption of goods and services would be 28.04%, based on the Tax Reform proposal approved by the Chamber.

It would be the highest in the world for a VAT (Value Added Tax). Today, the highest of its kind is that of Hungary, at 27%.

The Brazilian rate will be defined in a supplementary law. The initial expectation was that it would remain at 25%, but the effects of favored regimes, reduced rates and exemptions included in the text before the vote by the House should press for a higher rate.