On January 16, Brazil's President Luiz Inácio Lula da Silva sanctioned the first part of the tax reform regulation, known as PLP 68/2024, during an event at the Palácio do Planalto. The law was enacted with partial or total vetoes on 17 articles.
Secretary Bernard Appy stated that the reform is expected to increase the population's income by more than 10% above GDP growth over the long term, estimating a timeline of 10 to 15 years for these effects. He emphasized that the new system aims to be fairer, relieving the tax burden on the poor while increasing it for the wealthy.
Reginaldo Lopes, a project rapporteur in the Chamber of Deputies, called the measure the most ambitious structural reform of the Brazilian economy in the past 40 years. Eduardo Braga, a rapporteur in the Senate, noted that 2,300 amendments were presented during discussions, reflecting extensive dialogue with various stakeholders.
The reform will gradually replace current taxes, including Pis, Cofins, and ICMS, with two new taxes: the Goods and Services Tax (IBS) and the Contribution on Goods and Services (CBS). Implementation begins in 2026 with a testing phase, leading to full adoption by 2033.
Key provisions include exemptions on basic food items, differentiated tax regimes, and a cashback system for low-income individuals. A second bill, PLP 108/2024, is under consideration, which will establish a management committee for the IBS.
Additionally, President Lula vetoed a provision that exempted investment funds from the unified taxes, citing constitutional concerns about granting fiscal benefits.