The Chamber of Deputies concluded voting on the second and final project which regulates central points of tax reformsuch as the management and supervision of the Tax on Goods and Services (IBS) and rules on the Tax on Causa Mortis and Donations (ITCMD). The text now goes to presidential sanction.
The approved proposal is, for the most part, a Senate substitute for Complementary Law Project (PLP) 108/2024 and represents the second tax reform regulation text.
Below, see the main points and how they impact companies, consumers and specific sectors of the economy.
What is IBS and how will it be administered
IBS was created to replace two current taxes:
- Tax on the Circulation of Goods and Services (ICMS), charged by the states;
- Service Tax (ISS), charged by municipalities.
Management Committee
The collection, inspection and distribution of the new tax will be the responsibility of the IBS Management Committee (CG-IBS), formed by representatives of the Union, states and municipalities.
The committee’s responsibilities include:
- Coordinate the collection and inspection of IBS;
- Define methodology and rate calculation;
- Distribute resources among federative entities.
In practice, The idea is to simplify control: a single auditor will be able to monitor the fiscal situation of a company throughout the country.
Tax transition
From 2027 to 2033, the ICMS and ISS rates to finance the operation of the IBS Management Committee will fall in stages. The reduction schedule will be as follows:
- Up to 100% of current rates in 2026;
- Up to 50% in 2027 and 2028;
- Up to 2% in 2029;
- Up to 1% in 2030;
- Up to 0.67% in 2031;
- Up to 0.5% in 2032.
Union Financing for the Management Committee
Initial financing
Due to lower revenue at the beginning of the IBS period, the Union will finance the costs of setting up the Management Committee from 2025 to 2028 with up to R$3.8 billion, distributed as follows:
- R$600 million in 2025, proportional to the number of months since the body was installed;
- R$800 million in 2026;
- R$1.2 billion in 2027;
- R$1.2 billion in 2028.
From 2029 onwards, the Management Committee will reimburse the Union with resources from IBS collections. The project allows for an additional IBS amount of up to:
- 1% in 2029;
- 0.5% in 2030;
- 0.33% in 2031;
- 0.25% in 2032;
- 0.1% from 2033 to 2038.
The committee may use income from financial investments from its own revenues to pay off the advance.
Split payments: how it will work
The Management Committee will also be responsible for the split paymentwhich will allow automatic recording of company purchases and sales. The model is similar to the Pre-Filled Income Tax Declaration, reducing errors and evasion.
Zero rate for medicines
The proposal changes the current rule on medicines with a zero rate of IBS and Contribution on Goods and Services (CBS). Instead of a fixed list, the government will adopt a more flexible model:
The IBS Management Committee and the Ministry of Finance, in consultation with the Ministry of Health, must publish a list of exempt medicines every 120 days.
The exemption will apply to medicines intended for the treatment of:
- Rare or neglected diseases;
- Cancer;
- Diabetes;
- AIDS/HIV and other STIs;
- Cardiovascular diseases;
- Medicines from the Popular Pharmacy Program.
Remain exempt:
- Medicines purchased by the Unified Health System (SUS) or by philanthropic entities that provide services to the SUS;
- Serums and vaccines.
The change seeks to avoid judicialization and allow for faster updating of the list.
Football: taxation maintained for SAFs
Football Limited Companies (SAFs) will continue with current taxation. The Chamber rejected the increase foreseen in the first law of the reform.
- Taxation maintained: 3% (instead of 8.5% from 2027);
- Sports entities will also have a 60% reduction in general rates.
Sugary drinks and plant-based drinks
- Chamber rejected the maximum limit of 2% for the Selective Tax on sugary drinks. The tax rate for these products will not have a ceiling.
- Vegetable drinks (based on cereals, fruits, legumes, oilseeds and tubers) will have a 60% reduction in the new tax rates.
Sales platforms online
Marketplaces and digital platforms may be held jointly responsible for collecting taxes if the associated seller does not issue an invoice.
People with disabilities: changes in vehicle purchases
Expansion of tax benefits:
- Maximum value of the discounted vehicle increases from R$70,000 to R$100,000;
- The period for exchanging the vehicle with benefit drops from four to three years.
ITCMD
Charged on donations and inheritances, the ITCMD had points approved in the constitutional amendment of tax reform, in 2023, regulated in the project:
- Mandatory progressive rates, increasing according to the value of the asset transferred;
- Each unit of the Federation will be able to set rates, but the Senate will set a ceiling;
- For movable assets, titles or credits, the state of domicile of the donor or deceased will have jurisdiction;
- For real estate, tax will be linked to the state of location of the asset;
- Calculation basis equivalent to the market value of the transferred asset.
ITBI
Charged by municipalities on the sale of properties between living people, the Tax on the Transmission of Intervivos Assets (ITBI) was also regulated.
- Municipalities may apply a lower rate than the deed registration rate, if taxpayers advance payment to the date of signing the deed at the notary’s office, including for off-plan properties;
- Calculation basis defined by the market value (value under normal market conditions), instead of the individual sale value.
Financial system: new rates
For financial services, the sum of IBS and CBS rates will be gradual between 2027 and 2033:
- 10.85% (2027 and 2028);
- 11% (2029);
- 11.15% (2030);
- 11.3% (2031);
- 11.5% (2032);
- 12.5% (2033).
During the transition period, there will be temporary reductions if IBS, CBS and ISS are charged simultaneously. The reducers will apply as follows:
- 2 percentage points (pp) in 2027 and 2028;
- 1.8 pp in 2029;
- 1.6 pp in 2030;
- 1.4 pp in 2031;
- and 1.2 pp in 2032.
Furthermore, administrators of loyalty programs, such as airline miles, now follow the same tax regime as the financial system.
Import of financial services
There was an agreement to maintain a zero rate on the import of financial services linked to operations such as:
- Exchange;
- Issuance of securities;
- Fundraising abroad.
On the other hand, companies in the regular regime will not be able to generate IBS and CBS credit in loan operations referenced in foreign currency. The measure seeks to avoid transferring the tax calculation base outside the country.
Next step
With the vote completed in the Chamber, the project now goes to the President of the Republic for sanction. The new rules are part of the transition to the new tax system, which will be gradually implemented over the next few years.
