Brazilian Lower House Establishes Special Committee for Tax Reform

RIO DE JANEIRO, BRAZIL – The Chamber of Deputies formed, on July 10th, a special committee to analyze the provisions of the Proposed Amendment to the Constitution (PEC 45/19) on tax reform.

Legislators elected deputy Hildo Rocha as president of the committee and Sidney Leite as first vice-president. The rapporteur will be deputy Aguinaldo Ribeiro. The special committee shall have 43 members and the same number of alternates.

When attending the establishment ceremony, Chamber President Rodrigo Maia said that tax reform represents a challenge distinct from that on social welfare, the basic text of which will be voted this Wednesday in plenary.

Unification

“The Welfare [reform] unifies the country and somehow divides society. The tax [reform] divides the country and unifies society. Our challenge is to harmonize these divergences so that we can, as in social welfare, I hope, also have a text that better organizes the Brazilian tax system,” said Maia.

In May, the Constitution and Justice Committee of the Chamber of Deputies had determined the legal and constitutional admissibility of the tax reform proposal.

The proposal establishes a tax on Goods and Services Transactions (abbreviated IBS), which will replace three federal taxes (IPI, PIS and Cofins), a state tax (ICMS), and the municipal  ISSl tax–all are related to consumption.

The IBS will permit three rates — federal, state and municipal; the federal, state, and municipal governments may set different levels for their taxes. The projected transition time for introduction of the tax reform is ten years.

For the full picture, see our Brazil Tax Reform: Complete Guide.

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