(Adds details of proposal, quotes, byline)
BRASILIA, July 21 (Reuters) - Brazil’s Economy Minister Paulo Guedes on Tuesday delivered the first part of the government’s tax reform proposals to congressional leaders, which will combine two federal consumption taxes into a single value added tax.
The new uniform tax on goods and services, to be known by its Portuguese acronym CBS, will replace the so-called PIS and Cofins federal consumption taxes and be set at a rate of 12%, the Economy Ministry said.
In a presentation, the ministry said the new tax will be simpler, cheaper and more efficient for companies to implement, and be more transparent for consumers.
Speaking to reporters alongside Senate President Davi Alcolumbre and Lower House Speaker Rodrigo Maia after delivering the proposals, Guedes said tax reform will dictate the pace of the government’s broader economic reform agenda.
Tax on income, income, dividends, industry, and other indirect levies will also be looked at, he said. Calling it a “historic day,” Alcolumbre said the proposals will be analyzed alongside the state and local VAT proposals already underway in Congress to create a “unified” package.
The ministry said in its presentation the new tax will come into effect six months after approval by lawmakers.
Guedes said that simplifying Brazil’s complex tax system and reducing the country’s overall tax burden will dictate the pace of the government’s economic reform agenda, which also includes privatizations, state asset sales and slashing the size of the public sector. (Reporting by Jamie McGeever and Marcela Ayres; Writing by Jamie McGeever; Editing by Sandra Maler and Richard Chang)
Our Standards: The Thomson Reuters Trust Principles.