Dario Durigan: Government could tax 150 'rich' people and remove 10 million from income tax.

247 - The executive secretary of the Ministry of Finance, Dario Durigan, stated this Monday (17) that the government may increase taxation for the higher classes and, in return, “benefit around 10 million Brazilians” by expanding the income tax exemption range.

“We have a great lack of equality in Brazilian taxation. Discussing other points, many people bring up the issue: 'Look, Brazilian companies pay a 34% [tax rate].' That's in theory. When we look at the effective taxation, when we really evaluate it, it's far from 34%. Companies in Brazil pay, on average, 22%,” he said, participating in a panel with Nilton David, Director of Monetary Policy at the Central Bank (BC).

The secretary highlighted the importance of the tax reform approved by Lula in January. "We will see significant gains in productivity and efficiency [with the reform]," he added.

In 2025, the government intends, together with parliamentarians, to approve the second phase of the tax reform, concerning income. Complementary Law Project (PLC) 68/2024, already approved, was a reform concerning consumption.

According to the proposal approved by the president, 5 taxes currently levied (IPI, PIS, COFINS, ICMS and ISS) were eliminated and transformed into a dual Value Added Tax (VAT), with 2 types of collection (federal CBS and subnational IBS; one part administered by the Union and the other by the states and municipalities).

The portion collected by the Federal Government will form part of the CBS, which will include the Social Integration Program (PIS), the Contribution for Social Security Financing (Cofins), and the Tax on Industrialized Products (IPI). States and municipalities will retain the IBS, which will aggregate the Tax on the Commerce of Goods and Services (ICMS), a state tax, and the Tax on Services (ISS), a municipal tax.

Although the Constitution stipulated the unification of these taxes, regulation was necessary to define how the change to the new system would take place. In addition to the unification of taxes, the reform foresees the end of cumulative taxation, the cascading effect where the same tax is levied at various stages of the production chain, both on inputs and on the final product.

The regulation also addresses the transition to the new system. In 2026, there will be a testing phase, with trial rates for the CBS and IBS. From 2027 to 2033, the rates will gradually increase, with the current taxes gradually ceasing to be collected.

The tax reform regulations also defined points such as basic food basket products with a zero tax rate, sectors of the economy with exemptions or reduced tax rates, products with Selective Tax (levied on goods that harm health and the environment), and the scope of... cashback (tax refunds to the poorest).

The supplementary law also defined 18 activities for self-employed professionals that will have a reduced tax rate of 30%, the list of medicines and health items with tax exemption or reduction, and a cap on the standard tax rate of 26,5%.

Understand the changes:

Food

Basic national food basket, with zero tax rate.

• Sugar;

• Rice;

• Oats;

• Coffee;

• Beef, pork, lamb, goat and poultry meat and products of animal origin (except foie gras)

• Coconuts;

• Cassava flour and tapioca;

• Wheat flour;

• Beans;

• Infant formulas;

• Corn kernels;

• Pasteurized or processed fluid milk, in the form of ultra-pasteurized milk; whole, semi-skimmed or skimmed milk powder; and infant formulas defined by specific legal provisions;

• Butter;

• Margarine;

• Pasta;

• Herb tea;

• Babassu oil;

• French bread;

• Fish and fish meat (except salmonids, tuna, cod, haddock, saithe and roe and other by-products);

• Cheeses such as mozzarella, Minas cheese, Prato cheese, coalho cheese, ricotta, requeijão cheese, provolone cheese, Parmesan cheese, fresh unripened cheese, and reino cheese;

• Roots and tubers;

• Salt.

Food items with a 60% reduction compared to the standard rate.

• Corn starch;

• Cereals not covered by the zero tax rate;

• Crustaceans (except lobsters and crayfish);

• Tomato extract;

• Flour, groats and semolina of cereals; crushed or flaked grains of cereals;

• Regional nuts, peanuts and other seeds;

• Fermented milk, beverages and dairy products;

• Pasta;

• Natural honey;

• Soybean oil, corn oil, canola oil and other vegetable oils (except babassu oil, which is included in the 100% basket);

• Sliced ​​bread;

• Fruit pulps without added sugar, sweeteners, and preservatives;

• Horticultural products, fruits and vegetables;

• Natural fruit or vegetable juices without added sugar, sweeteners, and preservatives;

selective tax

An additional tax rate applies to the following products that are harmful to health or the environment:

• Sugary drinks;

• Alcoholic beverages;

• Mineral resources;

• Prediction contests and fantasy sports;

• Ships and aircraft;

• Tobacco products (cigarettes and related items);

• Vehicles.

Mineral exports will be exempt from Selective Tax.

Cashback

100% return of the CBS and at least 20% of the IBS to the low-income population regarding:

• Water;

• Gas cylinder;

• Phone and internet bills;

• Electrical energy;

• Sewage.

Other products and services with a 20% refund of CBS and IBS.

The refund will benefit the population registered in the Single Registry for Social Programs of the Federal Government (CadÚnico). In the IBS (Brazilian Social Security Institute), it will be up to the states and municipalities to define whether the refund will be greater than 20%.

New sectors with a 60% reduction in the tax rate.

• Accessibility devices;

• Early childhood, elementary, and secondary education;

• Agricultural inputs;

• Personal hygiene items, such as soaps, toothbrushes, and toilet paper;

• National artistic productions, works, events;

• Healthcare services and medical devices.

Liberal professionals

A total of 18 regulated professions will pay 30% less VAT. The activities benefiting from this are as follows:

• Administrators;

• Lawyers;

• Architects and urban planners;

• Social workers;

• Librarians;

• Biologists;

• Accountants

• Economists;

• Home economists;

• Engineers and agronomists;

• Statisticians;

• Veterinarians and animal scientists;

• Museum curators;

• Physical education professionals;

• Public relations professionals;

• Chemicals;

• Agricultural technicians;

• Industrial technicians;

Tax rate lock

With the inclusion of exceptions for sectors of the economy and products, the standard VAT rate has risen to 27,84%, according to preliminary calculations. This is because lower rates for one segment mean a higher rate on other products.

The supplementary law established a ceiling of 26,5% for the standard rate. In 2031, an assessment will estimate whether the final VAT rates, which will come into effect in 2033, will be higher than 26,5%. If so, the government will submit a bill to reduce exceptions for sectors and products, which will need to be approved by the end of 2032, to rebalance the standard rate at 26,5% in 2033.

From 2033 onwards, there will be automatic triggers to reduce the tax burden each time the reference rate exceeds 26,5%.

Nanoentrepreneur

In addition to the individual micro-entrepreneur (MEI), a regime created in 2008 to benefit those who earn up to R$ 81 per year, Congress created the figure of the nano-entrepreneur, a self-employed professional who earns up to R$ 40,5 per year (R$ 3.375 per month). This limit is equivalent to half the revenue of the MEI.

The nano-entrepreneur can choose between remaining in the Simples Nacional, a simplified tax regime for micro and small businesses with cascading taxation, or migrating to the VAT, with a higher but non-cumulative rate. If they migrate to the VAT, the nano-entrepreneur will no longer contribute to Social Security.

Apps

The tax on the gross revenue of app drivers or delivery workers will only apply to 25% of their earnings from rides. If this 25% is less than R$ 40,5 per year, the app professional will also be classified as a nano-entrepreneur.

Pharmaceutical products

All medications registered with the National Health Surveillance Agency (Anvisa) and formulas produced by compounding pharmacies will have a 60% tax rate. Approximately 400 active ingredients for serious treatments will have a zero tax rate.

Some medical products and healthcare services will have a reduced tax rate of 60%, such as products of homecare (Home patient care), surgical instrumentation and sterilization services. Veterinary medicines, vaccines and serums will also pay 60% less tax.

Health insurance Plans

Companies may be able to claim health insurance plans purchased for employees as IBS and CBS tax credits.

Health insurance plans for pets will have a 30% reduction in the tax rate.

Properties

50% discount on the general tax rate for real estate transactions.

VAT exemption for individuals with rental properties, provided that rental income is less than R$ 240 per year and owners have fewer than three rented properties. Above these limits, the landlord, including individuals, will have to include VAT in the rental calculation.

Bars, hotels, restaurants and parks

Simplification in the calculation of the specific tax regime for these sectors, with a reduced rate of 40% and exclusion of tips from the tax base. Sales of alcoholic beverages continue to be subject to the standard tax rate.

Conversely, those who purchase products or services from these sectors will not be able to deduct credits from the CBS and IBS taxes.

Amazon Refinery

President Luiz Inácio Lula da Silva did not veto the article that included the refining sector in the Manaus Free Trade Zone. Included by Senator Eduardo Braga (MDB-AM), rapporteur of the complementary law in the Senate, this point benefited a single company in the Northern Region, the Amazon Refinery (Ream).

According to the extraordinary secretary for Tax Reform at the Ministry of Finance, Bernard Appy, the government did not veto the article to prevent other companies from being included in the Manaus Free Trade Zone (with April).