By 330 votes to 104, the Chamber approves the main text of the regulation on tax reform

By 330 votes to 104, the plenary of the Chamber of Deputies approved, Monday evening 15, the basic text of the Supplementary Draft Law (PLP) nº 108/2024, which concludes the regulation of the consumption tax reform. The salient points – proposals for modification of certain sections of the main text – will be analyzed this Tuesday 16.

As the discussion of the project began, around 11 p.m., the President of the Chamber, Hugo Motta (Republicanos-PB), proposed to vote this Monday only on the merits, justifying that this procedure would be “the most prudent” so that the deputies have time to negotiate possible changes.

Novo and PL were the two parties that oriented their seats against the project, while the others were oriented in favor of it.

The bill creates the Goods and Services Tax (IBS) Management Committee – a new tax for states and municipalities – and establishes the rules for this new tax. The Management Committee will become permanent in 2026. The term of office of the Superior Council will be two years and the presidency will alternate between governors and mayors.

IBS and the Goods and Services Contribution (CBS) – a new federal tax – will become the main taxes to be levied on consumption in the country from 2027 – with a test phase already in 2026. The Ministry of Finance is awaiting this approval so that the reform can start to be implemented next year, with the publication of regulations from the Union and subnational entities.

Tax cap on sugary drinks

The rapporteur, MP Mauro Benevides (PDT-CE), made a series of changes to his opinion throughout the day. One of the main changes was the removal of the 2% limit for selective taxation (SI) on sugary drinks, such as soft drinks. Known as the “sin tax”, corporate tax is levied on goods considered harmful to health and the environment.

During the work in the Senate, the rapporteur of this Chamber, Senator Eduardo Braga (MDB-AM), accepted an amendment aimed at limiting the impact of the selective on sugary drinks. The suggestion was presented by Senator Izalci Lucas (PL-DF) and determined that “the selective tax rates established in sweetened beverage operations will respect the maximum percentage of 2%.”

By agreement, Benevides removed this limit and maintained the spread of taxation from 2029 to 2033, in order to gradually incorporate the difference between the ICMS rates levied on smoking products, alcoholic and sugary drinks and the modal rates of this tax.

SAF

Benevides also removed the tax burden reduction for football limited liability companies (SAF). The Senate text established that income from the transfer of athletes’ sporting rights and the transfer of the athlete to another sporting entity or their return to activity in another sporting entity would not be included in the basis for calculating the monthly and unified payment in the first five calendar years of the constitution of the SAF.

The rapporteur in the House clarified that a joint act of the Federal Revenue Service and the IBS management committee would regulate the way in which these taxes are collected.

Other changes

With the support of the National Committee of State and Federal District Financial Secretaries (Comsefaz) and the Governors’ Forum, entities representing Brazilian tax administrations managed to convince Benevides to restore a section dealing with the definition of tax authority. Thus, it has been reestablished that the tax administration is the official occupying an effective position in a specific career with competence to supervise and initiate.

The rapporteur to the Chamber had proposed the removal of this system which, for entities, would pose a “serious risk” to the information and systems of the Management Committee (which will be common to several Federal Revenue systems), which could be consulted by people outside the tax office (“ad hoc” tax administrations).

The articles that introduced State and National Treasury prosecutors into the Tax Administration Harmonization Committee (CHAT) were also deleted. There is a power struggle between prosecutors and tax auditors, who have different activities and training. The harmonization of the CBS and the IBS in integrated administrative litigation has also been reintroduced. According to the Senate text, the National Chamber for the Integration of Administrative Disputes will judge conflicts on the rules of these taxes.