In July, the Brazilian House of Representatives approved the primary bill regulating the Tax Reform. Complementary Bill (PLP) 68/2024 establishes the main rules for the Dual Value-Added Tax (IVA Dual), the Goods and Services Tax (IBS), the Contribution on Goods and Services (CBS), and the Selective Tax (IS). The bill now moves to the Senate for review, where further amendments may occur.

Dual VAT (IBS and CBS):

The House introduced a maximum rate of 26.5% for the Dual VAT (IBS and CBS). Additionally, the bill grants a 60% rate reduction for agricultural inputs, biostimulants, biofertilizers, and services related to farming and livestock.

The concept of “nano-entrepreneurs” has been added. These individuals, who are either starting a business or supplementing their income through small-scale entrepreneurship, with earnings up to BRL 40,500 annually, will be exempt from IBS and CBS.

Sin Tax:

The Sin Tax now includes electric vehicles, which, like other combustion vehicles (excluding trucks), will be taxed. The bill also adds lotteries, betting, sweepstakes, and fantasy sports to the list of taxable items.

Significantly, the tax on iron ore and its concentrates will be reduced from 1% to 0.25%.

For alcoholic beverages, the bill mandates a phased adjustment of Sin Tax rates between 2029 and 2033, aligning them with the differential between current ICMS (Tax on Circulation of Goods, Services, and Transportation) rates and the new Sin Tax rates.