DTQ 10 | PLP 68/2024 | Tax Reform

The tax reform in Brazil, with PLP 68/2024, aims to simplify and modernize the country's tax system, addressing four main areas: Selective Tax (IS), Construction in the Real Estate Regime, Nano-entrepreneur, and Split Payment.

The Selective Tax will be expanded to include new products, such as electric cars and betting, while trucks will be excluded. Differentiated rates will be defined by environmental criteria, but this may discourage the adoption of sustainable vehicles, counteracting the efforts of the Green Mobility Program. The inclusion of taxes on virtual betting seeks to mitigate the social and health impacts associated with online gambling.

Under the Real Estate Regime, the Construction Industry will have reduced tax rates to promote economic activity. However, dependence on tax subsidies can distort the market and complicate the tax system, necessitating a more cohesive economic policy.

The creation of the Nanoentrepreneur category aims to formalize entrepreneurs with annual revenue of up to R$ 40,500, offering tax exemption on consumption. This measure seeks to simplify formalization, but may increase the complexity of the system and limit business growth.

The Split Payment system divides the responsibility for tax collection during transactions. "Automatic Split Payment" collects taxes in real time, while "Simplified Split Payment" applies to transactions with end consumers. This innovation aims to increase efficiency and tax compliance.

Additional changes include adjustments to the taxation of medicines, with exemptions for sanitary napkins and tax reductions for certain medications. Bars and restaurants will benefit from the non-cumulative regime, allowing deductions for taxes paid in previous stages, and excluding delivery from the tax base.