The Federal Court of Accounts (TCU, Brazil’s external audit tribunal) approved an 11.3% reference rate for the Contribution on Goods and Services (CBS, the new federal VAT). The court’s decision also established the application of a 44.2% reduction factor.
Impact on market expectations
The percentage approved by the oversight body exceeded initial market estimates. According to expert assessments, setting this reference rate for the CBS has the potential to raise Brazil’s overall Value-Added Tax (VAT) to as much as 29%.
Next steps in the Legislature
Despite the TCU’s approval of the reference rate, the figure is not yet definitive for practical application in the tax system. The determination of the final rate that will apply to commercial transactions and services must still be reviewed and established by the Federal Senate.
The exact definition of the VAT rate remains central to planning for companies and investors, who should continue monitoring developments in the National Congress.
This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.
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