The tax system in Brazil has been known to be relatively complex. Brazil’s new indirect tax bill was introduced as a reform initiative, with intent to provide a simplified process to the indirect, state, and federal tax systems.

The new tax bill, CBS (Contribuição Social Sobre Operações com Bens e Serviços), was proposed in Brazil’s tax reforms, and is intended to replace the social integration program (“PIS”) and the social security financing (“COFINS”) system. The new tax rate of 12% will offer a simplification to the current multifaceted indirect tax system in Brazil.

This will essentially serve as a new VAT on the sale of goods, and will also apply to all digital transactions, both within and across Brazil’s borders. Adoption of this amendment would be instrumental in aligning the country with the most modern VAT models being implemented all around the world.

Employer Considerations:
Once implemented, the new tax has high potential to simplify some of the complex tax structures in Brazil. This could also in turn entice foreign investment. The information shared in this article provides general information only, and not professional advice. If you need to consult on international expansion of your business or have specific questions about local policy compliance, contact us today to speak to one of our experts.

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