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LATIN AMERICA ADVISOR

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

January 10, 2024

How Much Will Brazil’s Tax Reform Spur the Economy?

Brazil’s Congress last month approved a landmark reform of the country’s consumption taxes. // File Photo: rawpixel.com.

Q

  • Brazil’s Congress approved a landmark overhaul of the country’s byzantine tax system in December, marking a major victory for President Luiz Inácio Lula da Silva, who said the reform will “facilitate investment.” The overhaul includes a merging of five consumption taxes into two value-added taxes. What are the most important parts of the reform? What are the main benefits and drawbacks of the reform? How will it affect investment in Brazil, and what industries will be most affected?

A

Manuel Orozco, director for sovereign and international public finance ratings at S&P Global: “Following the approval of Brazil’s revenue-neutral tax reform, we upgraded our long-term sovereign ratings on the country to ‘BB’ from ‘BB-’. In our opinion, the tax reform extends Brazil’s track record over the last seven years of pragmatic policy implementation that will continue to anchor its macro stability. Among the reform’s key merits are a substantial reduction of consumption tax codes and their consolidation into a dual-VAT system. These changes will help tax governance for all levels of government in Brazil, as well as substantially simplify tax compliance and the noncumulative features in the Brazilian tax system. That said, the implementation will be…”

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The Inter-American Dialogue publishes the Latin America Advisor every business day for a distinguished membership of informed corporate leaders, scholars, and government officials invested in Latin America’s development and future. The Advisor‘s highly regarded Q&A section covers questions submitted by subscribers themselves. Commentators regularly include heads of state, business leaders, diplomats, economists, analysts, and thought leaders from around the world. Many of the world’s largest and fastest-growing companies subscribe to the Advisor. To subscribe, click here. For terms and conditions, click here. For more information, contact Gene Kuleta, editor of the Advisor, at gkuleta@thedialogue.org.
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Diego Arria
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Merike Blofield
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Devry Boughner Vorwerk
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Joyce Chang
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J.P. Morgan

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Jon E. Huenemann
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James R. Jones
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Barbara Kotschwar
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John Maisto
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Nicolas Mariscal
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Thomas F. McLarty III
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Beatrice Rangel
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Ernesto Revilla
Head of Latin American Economics, Citi

Gustavo Roosen
President,
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Andrés Rozental
President, Rozental &
Asociados

Shelly Shetty
Managing Director,
Sovereigns, Fitch

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