The Brazilian Consumption Tax Reform: An Overview

Brazil’s recently enacted consumption tax reform replaces a system based on distortionary and inefficient federal, state and municipal taxes with two value-added taxes subject to the same rules: one under federal jurisdiction and another under shared jurisdiction between states and municipalities. In this article, the author presents the main features of the new system, with particular emphasis on the specific characteristics of the Brazilian model, the transition that will unfold over the coming years and the special tax regimes.