Brazilian VAT ICMS tax reform falls over

Mon 25th Mar 2013

Plans to simplify one of the most complex indirect tax regimes in the world has stalled as Brazil fails to agree on intra-state sale tax regimes.

Currently, Brazilian VAT ICMS is set be the individual 26 federal states. As a result, the rules are confusing, and rates vary from between 7% and 12%. For several years, the state government has been attempting to align all regions at 4%. This required to the creation of a complex compensation fund.

However, this month, plans to introduce the new, single rate for 2014 were scuppered and now face a long, further delay.

Brazil is facing similar problems to India, which is also trying to align its states around a single Indian GST regime.

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