Brazilian senate approves tax reform Bill, including changes to inheritance tax

Following two rounds of voting, the Bill was approved on November 8, 2023. It is aimed at simplifying taxes and lowering the likelihood of disputes. It will consolidate five existing multi-tiered taxes into two VAT taxes: one federal and one for states and municipalities.

Among the key changes is a move to progressive taxation on inheritance and donations, expanding the tax base for inheritance. The Bill also gives formal jurisdiction over the deceased’s movable assets, titles and credits to the state or municipality in which the deceased was domiciled.

Donations to non-profit institutions working with public and social causes will have exemptions established under a supplementary law. Rules providing for donors domiciled abroad will similarly be set out in a supplementary law. The Bill enacts rules for the collection of taxes until such a law is established.

The taxation of digital platforms will also be reformed under the Bill. No uniform provisions are currently in place; however, the new legislation provides that such entities involved in transactions may be subject to taxation, even if resident or domiciled outside Brazil.

The Bill will now be returned to the Chamber of Deputies (Câmara dos Deputados) for final approval. It will pass through another two-round vote and will require a 60 percent majority to be approved. If enacted, the Brazilian government has 90 days to submit Bills addressing income tax and payroll tax reform.

The government has stated that it hopes to see the reform approved and enacted by the end of 2023.

Sources

• Mattos Filho
• Reuters
• Bloomberg Tax
• BNAmericas