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Perspectives for the future of tax reform and the next legislative steps

In the final days of 2023, the long-awaited tax reform was enacted. The new legislation aims to restructure the tax system, seeking simplification, equity, and stimulating economic growth. The approval of the reform brought about a series of changes in taxes and fiscal policies, directly impacting businesses, consumers, and the market as a whole.

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It is now up to the companies to adjust their strategies and processes to align with the changes resulting from the approval of this constitutional amendment. For instance, the unification of taxes (ICMS, ISS, IPI, PIS, and Cofins) into a single levy, to be shared between the federal level (CBS, Contribution on Goods and Services) and the state/municipal level (IBS, Tax on Goods and Services), implies the need to review accounting, tax and operational practices in order to comply with the new tax system.

In addition, it will be crucial for companies to understand the financial and logistical impacts, ensuring a smooth and efficient transition to the new tax structure.

In this context, before the reform was approved, at least 22 states increased their ICMS rates, according to a report by Poder360. In a document obtained by the news portal, the treasury secretaries of six states do not explicitly justify the change but mention the significant reduction in the tax autonomy of states and municipalities:

PEC 45/2019, approved by the Plenary of the Federal Senate on November 8, not only significantly reduces the tax autonomy of Brazilian states and municipalities, but also establishes a mechanism for distributing the revenue of the new Tax on Goods and Services (IBS), which has induced the states into a generalized movement to raise the current modal rates of the Tax on the Circulation of Goods and Services (ICMS), a tax that will be abolished in 2033, but whose effects, from the perspective of the federative transition, will be felt until 2078.

In any case, the realization of these changes depends on the approval, in the coming years, of complementary laws by the National Congress, which will regulate the proposed amendments and establish the CBS and IBS. These laws will be crucial for the effective implementation of the tax reform.

Specialized consulting and constant updating on regulations are essential for companies to adapt effectively and capitalize on the opportunities presented by the tax reform. For this, rely on Pryor Global! We specialize in executing activities in the accounting, fiscal, financial, and payroll areas.

Contact our team right away.

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