Скачать или смотреть Why Are Consumer Goods So Heavily Taxed in Brazil? The Impact of Taxes on Your Wallet

Brazil has one of the most complex and highest consumption tax systems in the world. In January 2025, the government enacted Complementary Law No. 214/2025, which introduces a major tax reform aimed at simplifying and unifying consumption taxes across federal, state, and municipal levels.

The reform replaces several existing taxes-such as ICMS (state VAT), ISS (municipal service tax), PIS, and COFINS-with a dual VAT system composed of:

IBS (Tax on Goods and Services), shared between states and municipalities, and

CBS (Contribution on Goods and Services), levied by the federal government.

Additionally, a new Selective Tax (IS) targets products considered harmful to health or the environment, like cigarettes, sugary drinks, alcoholic beverages, and some luxury goods.

This new system aims to reduce complexity by allowing broader tax credits and eliminating many previous limitations, making the tax burden more transparent and less prone to disputes. However, tax rates may still be high, with some goods potentially taxed up to 26.5%.

The reform will be gradually implemented from 2026 to 2033, during which old and new taxes will coexist. The changes are expected to impact prices of consumer goods significantly, affecting purchasing power and the cost of living, especially for lower-income families.

Understanding this reform is essential for businesses and consumers, as it reshapes how consumption is taxed in Brazil and influences economic behavior nationwide.

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