One of the novelties brought about by the ongoing Brazilian tax reform is the proposal for a differentiated tax regime for players in the financial market, including fintechs and other players in the segment.
Although the bill relieves taxpayers of tax bureaucracy, the simplification of taxation through a single tax raises concerns about a considerable increase in the tax burden.
The tax reform introduced the creation of an exclusive regime for financial services, covering various activities such as credit operations, foreign exchange, securities and insurance, among others. Currently, the taxation on consumption of these services includes PIS, COFINS and ISS. With the change, the sector will now be subject to the VAT-DUAL Value Added Tax, levied on services through the Goods and Services Tax – IBS and the Goods and Services Contribution – CBS.
A specific point of concern for the financial sector is taxation at destination. As planned, the IBS will be levied where the service is consumed, which could lead to differences in tax rates between municipalities.
In addition, there is the possibility of double taxation of Financial transaction tax – IOF and IBS on some services. This is because the IOF rules remain the same, which can result in IBS being levied concurrently in certain cases.
Recently, Supplementary Bill No. 52/2024 was presented, which establishes and regulates the specific IBS and CBS tax regimes applicable to financial services and may mitigate some of the risks raised above. However, the bill has not yet been approved and there are no definitions, which requires the market’s attention.
