Yesterday, the House of Representatives approved the regulation bill for the tax reform (Proposed Constitutional Amendment (PEC) 68/2024), proposed by Deputy Reginaldo Lopes (PT-MG), which aims to simplify consumption taxes.

The text had been approved by the Senate last week, but due to amendments, it had to be reassessed by the House of Representatives. The bill now awaits presidential sanction.

This reform regulates the collection of the Contribution on Goods and Services (CBS), the Tax on Goods and Services (IBS), and the Selective Tax (IS), which will replace PIS, COFINS, ICMS, ISS, and partially IPI.

The House rejected some amendments introduced by the Senate, including:
✔️ 60% tax reduction for sanitation services;
✔️ Exclusion of sugary beverages from the Selective Tax (IS);
✔️ Implementation of tax substitution for IBS and CBS.

Following these modifications, the reference rate for IBS and CBS is expected to be around 27.8%, subject to confirmation in the coming years.

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Key Updates in the Approved Proposal

Medications: 383 medications will have a zero tax rate. Other medicines not listed will benefit from a 60% reduction in the general tax rate.

Sanitation Services: The House rejected the tax reduction approved by the Senate.

Commerce: Commercial representatives will not receive a reduced tax rate.

Veterinary Services & Pet Health Plans: 30% tax reduction for pet health plans.

Sugary Beverages: The Selective Tax (IS) will apply, as initially proposed.

Football Corporations (SAF): The 8.5% tax rate for Sociedades Anônimas de Futebol (SAF) remains unchanged.

Split Payment System: Mandatory in the retail sector and will be automatically processed by major payment systems. A manual version will only be allowed if the payment system does not support automatic tax splitting.

Cashback: 100% refund of CBS and 20% refund of IBS on electricity, water, gas, and telecom bills for low-income individuals.

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Transition Period

The transition period will last 8 years (from 2026 to 2033), during which current taxes will be gradually phased out as CBS and IBS are introduced:

2026: Introductory tax rates of 0.1% for IBS and 0.9% for CBS, with compensation allowed against PIS and COFINS.

2027: Full implementation of CBS at the reference rate, with the elimination of PIS and COFINS. IPI rate reduced to zero, except for products manufactured in the Manaus Free Trade Zone (ZFM).

2029-2032: Gradual introduction of IBS and proportional reduction of ICMS and ISS rates.

2033: Full implementation of the new tax system.

We are available to provide any necessary clarifications on this matter.