The Brazilian Senate has approved the report on PLP (Supplemental Bill) 68/2024, a significant step in the tax reform process. This proposal, which is the main regulatory framework for the reform, will now be presented to the House of Representatives, considering that there were changes to the text. After a new vote in the House, the project will be forwarded to the Presidency of the Republic, which may sanction it or partially veto parts of the project.
Key Changes Introduced by the Senate:
- Split Payment
Modalities: The split payment modalities approved by the House have been maintained.
Gradual Implementation: The split payment system will be gradually implemented, initially focusing on the main electronic payment instruments used in retail.
- Cashback
Inclusion of Services: Telecommunications services, such as internet and telephony, have been included in the cashback scheme, benefiting consumers of essential services.
- Real Estate
Specific Regime: This regime applies to construction, development, land subdivision, sale, leasing, renting, management, and brokerage of real estate.
Criteria for Inclusion: Individuals conducting real estate transactions will be considered regular taxpayers of IBS (Tax on Goods and Services) and CBS (Contribution on Goods and Services) if their total revenue from these transactions exceeded R$ 240,000 in the previous year or if they have more than three distinct properties. This aims to prevent excessive taxation of small property owners and encourage the formalization of real estate transactions.
Social Deduction: Deduction of R$ 100,000 per new residential property and R$ 30,000 per residential lot, after the adjustment deduction. Deduction of R$ 600 per residential property.
Reduced Rates: A 60% reduction in IBS and CBS rates for leasing, onerous assignment, and renting transactions. A 50% reduction in standard rates for property management and brokerage transactions.
Cash Basis Taxation: Taxation will occur at the time of payment, eliminating taxation on potential defaults in leasing, development, and land subdivision.
Transition Rules: Specific rules for transactions started before January 1, 2029, allowing the option for special taxation regimes for real estate incorporations and land subdivision.
- Capital Goods
Full and Immediate Credit: Guarantee of full and immediate IBS and CBS credit on the acquisition of capital goods, facilitating investment recovery.
- Tax Substitution
Establishment: Establishment of tax substitution for alcoholic beverages, mineral waters, soft drinks, cigarettes, and other tobacco products.
- Food
Reduced Rates: Inclusion of new items in the 60% reduction and the National Basic Food Basket (CBNA).
- Medicines and Medical Devices
Zero Rate: Zero rate for IBS and CBS on the supply of medicines for various care lines. The definition of the NCMs (classification code of the merchandise) of the benefited medicines will be the responsibility of a government technical body.
Home Care and Sterilization Services: Inclusion with reduced rates, directly benefiting home and hospital health services.
- Selective Tax
Incidence: Inclusion of weapons and ammunition in the incidence of the Selective Tax, except if intended for the Armed Forces or public security agencies.
Monthly Calculation: Determination of monthly calculation and possibility of payment via split payment.
Mineral Goods: Extraction set as the taxable event for mineral goods.
The FIUS Tax Advisory Team will continue to monitor the topic and provide relevant updates.