Changes on Brazilian Standard ICMS States for 2024
The final text of the Brazilian Tax Reform, possibly to be enacted this week, has prompted certain Brazilian states to adjust their internal standard rates due to concerns about a potential impact on their autonomy in regulating and collecting ICMS (State-Level VAT).
After the successful implementation of the Tax Reform, the ICMS (currently under state-level jurisdiction) will be collected centrally and then distributed to the Federation Units. This will follow a new specific method introduced by the government, which considers each state's share based on the average collection from 2024 to 2028.
Therefore, this restructuring has a direct impact on ICMS rates as States are encouraged to increase their rates to optimise collection.
So far, of the 27 Brazilian States, 10 States and the Federal District have made the changes official. However, there are others, such as Rio de Janeiro and Rio Grande do Sul, still in the voting process:
| State | Current Rate | New Rate | Initial Effects |
|---|---|---|---|
| Pernambuco | 18% | 20.5% | JAN/01/24 |
| Ceará | 18% | 20% | JAN/01/24 |
| Paraná | 19% | 19.5% | MAR/13/24 |
| Paraíba | 18% | 20% | JAN/01/24 |
| Rio Grando do Norte | 20% | 18% | JAN/01/24 |
| Rondonia | 17.5% | 19.5% | JAN/12/24 |
| Distrito Federal | 18% | 20% | JAN/21/24 |
| Bahia | 19% | 20.5% | FEB/07/24 |
| Maranhão | 20% | 22.0% | FEB/19/24 |
| Espirito Santo | 17% | 19.5% | APR/01/24 |
| Goiás | 17% | 19.0% | APR/01/24 |
These changes will have immediate repercussions on final prices, as they will influence the Manufacturing Price (PF) and the Maximum Price to the Consumer (PMC) of various products. For more insights on Brazil's monumental Tax Reform and its key takeaways, a good start would be my previous blog on this topic.
Disclaimer
Please remember that the Vertex blog provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information. The views and opinions expressed in the Vertex blog are those of the authors and do not necessarily reflect the official policy, position or opinion of Vertex Inc.
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