

Tax reform regulation bill approved in Brazil’s Congress
The final text of Supplementary Bill No. 68/2024 provides for general rules for IBS, CBS, and IS taxes
Subjects
In the wake of changes made in the Senate last week, Brazil’s House of Representatives approved the final text of Supplementary Bill No. 68/2024 on December 17, 2024. The bill outlines general rules applicable to the new Goods and Services Tax (IBS), Contribution Tax on Goods and Services (CBS), and Selective Tax (IS), all of which are provided for under the country’s recently instituted tax reforms.
Having been approved in Congress, the bill now only requires presidential assent. Key aspects are outlined below:
Aspects the House maintained in the approved bill
- Standard tax rate: a ‘lock’ on the standard tax rate has been reconfirmed. Moreover, a provision has been included requiring the Executive Branch to submit a supplementary bill to Congress proposing measures to reduce the rate in the event it exceeds this lock. However, a review of the standard rate is still expected.
- Selective tax: a levy on sugary drinks has been upheld. However, disposable plastic items and weapons and ammunition have been excluded from the tax, while a provision expressly restricting the levy of the selective tax on exports of mineral goods has been included. Regulations for the Selective Tax are also set to be issued.
- Manaus Free Trade Zone: 0% IBS and CBS rates for intermediate material goods intended for contract manufacturing.
- Split payment: an obligation has been upheld for payment system operators and digital platforms to allow for split payments in the context of the main payment instruments used by retailers.
- Cashback programs: the approved text provides for reimbursing 100% of CBS and 20% of IBS on purchases of 13kg gas cylinders or piped gas supplies, as well as on water, electricity, and telecommunications bills. In other cases, 20% of the CBS and IBS will be reimbursed, except for products the selective tax is levied upon.
- Medicines and treatments for serious diseases: IBS and CBS are reduced to 0% on medicines that are included on an exhaustive list attached to the bill. This reduction is subject to evaluation every five years, except in the event of a public health emergency.
- Meat remains in the basic food basket: beef, pork, lamb, goat meat, poultry and fish continue to be included in the special regime applicable to the National Basic Food Basket (CBNA), meaning the taxes levied on them will be reduced to 0%.
- Greater reduction in the rate applicable to real estate transactions: the cash regime will be applied to determine the taxable event in real estate transactions. In sales of real estate, the rates will be reduced by 50% (relative to the standard rates), except for transactions related to liens, which will be immune. Furthermore, individuals may be taxed when renting or leasing properties if their annual income from real estate activities exceeds BRL 240,000 and they possess more than three properties.
- Goods for personal use and consumption: the following goods continue to be excluded from classification as goods for personal use and consumption: (i) workplace food and childcare services for employees and management provided during working hours; (ii) employee transportation voucher services (vale-transporte) linked to an agreement or convention; and (iii) education benefits for employees and their dependents as a result of a collective agreement or convention. Furthermore, goods and services that family offices provide in relation to asset management for individuals will be classified under personal use and consumption.
Matters vetoed by the House
- Tax substitution: a provision that the Senate had included regarding tax substitution for alcoholic beverages, soft drinks, mineral water, cigarettes, and other tobacco products has been removed.
- Rate reduction: the House of Representatives removed sanitation activities, commercial representatives, mineral water, biscuits/cookies and crackers have been removed from the text, meaning they are no longer subject to tax reductions.
- Presumed credit: the possibility of appropriating presumed IBS and CBS credits linked to acquisitions of goods and services from non-taxpaying rural producers or integrated rural producers has been excluded.
- Football Corporations (SAFs): The final rate applicable to these entities will be 8.5% after the House of Representatives vetoed a reduction to 5% that the Senate had included.
For more information on Brazilian tax reform regulations, please contact Mattos Filho’s Tax and Government Relations practice areas.