Brazilian Government submitted to the National Congress on July 21st , the Ordinary Bill (PL) #3,887/2020, which intends to create the Social Contribution on Operations with Goods and Services - CBS (new Federal VAT) and promotes changes in federal tax legislation.

CBS unifies and replaces PIS/COFINS on revenues, PIS/COFINS on Imports and PIS on payroll. On imports, the concept of services also includes the assignment and licensing of rights, including intangibles.

​

According to Government, due to the imperfection and complexity of the taxable event and the current PIS and COFINS non-cumulative regime, casuistic exemptions and special suspensive regimes proliferated that made this legislation inoperable in a safe way for the Tax Authorities and taxpayers. For this reason, the proposal presented establishes a uniform regime of incidence and eliminates exceptions, that is, there will no longer be a cumulative regime as under CBS.

​

Also according to clarifications from Government, CBS is an authentic VAT, where each company only pays what it adds to the product or service, being able to discount any credits corresponding to the value of CBS highlighted in the invoices on acquisitions of goods and services, highlight that becomes mandatory .

​

CBS will have a general rate of 12% (except for financial entities, whose rate will be 5.8%) and will only apply to gross revenue and additions to this revenue, such as fines and charges. Export revenues (the appropriation of credits linked to them is ensured), and non-operating revenues, including dividends, revenues from financial investments and interest on net equity, will not be taxed.

​

CBS will be calculated from the outside, not including in its calculation basis, in addition to CBS itself, ICMS and ISS highlighted in the invoice and unconditional discounts. The legal entity can make adjustments to the tax records to cancel amounts referring to canceled sales and returns of sales whose original operations were considered in the calculation of CBS.

​

One of the novelties is the inclusion of digital platforms as responsible for the collection of CBS levied on the transaction carried out through it, in the event that the legal entity that sells does not register the transaction by issuing an electronic invoice.

​

Some differentiated regimes were maintained and created for technical and constitutional reasons, such as the national simplified regime (Simples Nacional), agricultural regime for small farmers, single-phase regime for gasoline, diesel, LPG, natural gas, aviation kerosene, biodiesel, alcohol and cigarettes, in addition to the Tax Free Zone in Manaus and exemption for revenue resulting from the sale of products in the basic basket listed in the project, cooperative acts, collective public transportation and sale of residential properties to individuals.

​

Exemptions related to PIS and COFINS that have been granted for a certain period and on a conditional basis will be maintained, pursuant to art. 178 of the National Tax Code.

​

Goods received in return after the date on which the new law comes into force, relating to sales made prior to that date, will give the right to the appropriation of CBS credit corresponding to PIS and COFINS that has been levied on the revenue from returned sales.

​

PIS and COFINS credits regularly appropriated until the day immediately preceding the entry into force of the new law will remain valid and usable, and cannot be used to discount CBS, but can be offset against CBS or any other federal tax, or reimbursed , under the terms of the applicable legislation.

​

Still about the credits, we understand that the amounts of PIS and COFINS credits resulting from the final decision of the lawsuit that recognizes the exclusion of ICMS or ISS from its calculation basis, may be offset against CBS payable, pursuant to art. 74 of Law # 9,430 / 96.

​

We emphasize that it is still a bill, subject to changes and approval by the National Congress, but the Government's idea (which requested urgency in the process) is that CBS comes into force six months after the publication of the new law.

​

We will continue monitoring the progress of the project, including possible changes, and we are able to assist companies in the interpretation, assessment of financial and business impacts, as well as in the transition to the new tax.