1/10/2024
In last december, significant changes occurred in the legislative tax landscape with the approval of several norms that altered taxation rules in Brazil. In this regard, we highlight the three main norms that were approved in that month.
The first and the most important was Constitutional Amendment (CA) No. 132/2023, known as the “Tax Reform.” The text of CA No. 132/2023, promulgated on 20.12.2023, foresees the extinction of five taxes – the Tax on Services (ISS), the Tax on Circulation of Goods and Services (ICMS), the Tax on Industrialized Products (IPI), the contribution to the Social Integration Program (PIS), and the Contribution to Social Security Financing (COFINS) – and the establishment of a dual VAT, consisting of the Contribution on Goods and Services (CBS) at the federal level and the Tax on Goods and Services (IBS) with shared jurisdiction among states, municipalities, and the Federal District.
In turn, another important fiscal norm, published on 13.12.2023, was Law No. 14.754/2023, which changed the taxation regime for investments in funds in the country and income earned by individuals from financial investments and companies located abroad. The main changes introduced in Law No. 14.754/2023 involve alterations in the taxation rules for exclusive funds and annual taxation in the Personal Income Tax Declaration (DIRPF) on capital income invested abroad, in the forms of financial investments, profits, and dividends from controlled entities.
Finally, the third norm, published on 13.12.2023, is Law No. 14.789/2023. This Law changes the federal taxation system on fiscal benefits granted by States and the Federal District aimed at subsidies for investment. In this regard, Law No. 14.789/2023 terminates the exemption on federal taxes and implements a system of tax credits that could be reimbursed or offset against federal taxes.
These aforementioned norms, as seen, bring about significant changes in the Brazilian tax landscape and are yet to be subject to regulation.
Our tax team is available to provide clarification and guidance on the discussed topic.
Author: Phillipe da Cruz Silva
