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The
reform had initially been approved by deputies in July, but had
to be voted on again after the Senate made changes to the text
before passing it last month.
In the two required votes, as the reform is a constitutional
amendment, lawmakers voted 371 to 121 and 365 to 118 to pass the
bill, both well above the required 308 votes.
The reform will now be signed into law in a joint session of
Congress expected to take place next week.
The eagerly anticipated reform, repeatedly attempted by previous
administrations, is a central pillar of Lula's plans to boost
productivity and the potential growth of Latin America's largest
economy.
It aims to simplify Brazil's notoriously complex tax system,
which imposes high compliance costs on businesses.
The proposal consolidates five existing levies into a
value-added tax (VAT) with distinct federal and regional rates,
to be determined later through complementary bills. The full
implementation of the new taxes is expected only in 2033.
It also introduces a selective tax targeting products considered
harmful to the environment and health.
In contrast to the Senate version, the final text approved by
the lower house excludes certain sectors the Senate had added to
the list of those eligible for more advantageous tax schemes,
such as sanitation services, highway concessions and air
transportation services.
The reform also shifts the tax base from the point of production
to the point of consumption over a 50-year transition period
starting in 2029, a change expected to favor Brazil's wealthier
and more populous states.
To offset these changes, the reform introduces various funds and
compensation mechanisms for states, many of which have been
viewed with reservations by analysts due to their high fiscal
cost over an extended period.
(Reporting by Maria Carolina Marcello and Marcela Ayres; Writing
by Peter Frontini; Editing by Kylie Madry)
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