News and Business
Brazil’s House of Representatives approves tax reform bill
Approved after two rounds of voting, the bill will now be sent to the Senate for review
Subjects
On July 6, 2023, Brazil’s House of Representatives approved the substitute version of Constitutional Amendment Bill (PEC) No. 45/2019 after two rounds of voting in plenary. The bill is set to overhaul consumption taxation and also reform specific aspects of wealth taxation.
Voting occurred shortly after the bill’s rapporteur, Representative Aguinaldo Ribeiro (Progressistas/Paraíba), presented the definitive version of a substitute text. In approving the bill, the House voted 382-118 in the first round and 375-113 in the second round.
Below, we compare the most important aspects of the current system with the system that will be in place after the reform.
Please click here to view an infographic highlighting the main aspects of the approved text.
What comes next
The bill will now be sent on to the Senate, where its leaders will establish the procedure for reviewing the text. At this stage, it is possible that the Senate Economic Affairs Committee’s (CAE) National Tax System Evaluation Working Group will analyze the bill. The group was created via Order No. 45/2023 (authored by Senator Vanderlan Cardoso – PSD/Goiás) and had its first meeting on June 14, 2023.
Among the Working Group’s members, there are three senators (Oriovisto Guimarães – PODEMOS/Paraná, Carlos Viana – Liberal Party/Minas Gerais and Izalci Lucas – Social Democratic Party/Federal District) who authored PEC No. 46/2022, which sought to implement the tax reform while maintaining the taxes that currently exist.
After potentially being evaluated by the Senate committees, the bill will then be reviewed in a plenary session. To be passed, it must be approved by three-fifths of the senators (49) over two rounds. If the bill’s text is significantly modified (i.e., amendments that go beyond the wording), it will be sent back to the House of Representatives. Should this occur, it is possible that the tax reform will be ‘divided up’ and only the part approved by both Houses will be enacted.
For further information on tax-related measures and new legislative developments, please contact Mattos Filho’s Tax and Government Relations practice areas.
