Tax Changes to Expect in Brazil for 2023

Tax Automation Technology for Brazil

At the end of each year, the Federal, State, and Municipal governments publish important changes to indirect taxes. It is expected that most of these changes start to take effect during the first quarter of 2023. Therefore, Brazilian taxpayers need to be aware, as some of these amendments may require adjustments to a companies' tax compliance, calculation, and payment procedures.

Below are the main changes to note for 2023 that could intensify a company’s indirect tax burden. 

PIS e COFINS

I – Rules Consolidation 

IN RFB 2121/2022

Consolidation of PIS and COFINS rules and some amendments by the Normative Instruction of the Federal Revenue Service of Brazil (IN 2121/2022), affecting the calculation bases composition (e.g. exclusion of ICMS); the inclusion of the events sector among those benefiting from a zero rate; new possibilities of deductions in such contributions calculation (e.g. deduction of ICMS amounts); inclusion and exclusion of items and services in the concept of inputs for PIS and COFINS credit purposes, among others.

II – Oil and Gas

MP 1.157/2023

The Provisional Measure 1157/2023 reduced to zero percent the rates of PIS and COFINS levied on operations carried out with diesel oil, biodiesel, liquefied petroleum gas, alcohol, aviation kerosene, vehicular natural gas, and gasoline.

ICMS

I – Increasing of the Standard Rate 

Many states have increased the standard rate for domestic transactions as shown below:

State Previous Rate New Rate Legislation Effective Date
Acre 17% 19% LC 422/2022 April 1st, 2023
Alagoas 17% 19% LAW 8.779/2022 April 1st, 2023
Amazonas 18% 20% LC 242/2022 March 29th, 2023
Bahia 18% 19% LAW 14.527/2022 and DECREE 21.797/2022 March 22nd, 2023
Maranhão 18% 20% LAW 11.867/2022 April 1st, 2023
Pará 17% 19% LAW 9.755/2022 March 16th, 2023
Piaui 18% 21% LC 269/2022 March 8th, 2023
Paraná 18% 19% LAW 21.308/2022 March 13th, 2023
Rio Grande do Norte 18% 20% LAW 11.314/2022 April 1st, 2023
Roraima 17% 20% LAW 1.767/2022 March 30th, 2023
Sergipe 18% 22% LAW 9.120/2022 March 20th, 2023
Tocantins 18% 20% MP 033/2022 April 1st, 2023

II - Essential and indispensable services

The ICMS tax rate for transactions with fuel, natural gas, electricity, communications, and public transportation became limited to the standard rate in force for internal transactions in the state, because such goods and services were included in the list of essential and indispensable items (LC 194/2022).

However, it has been noted that some states did not respect this regulation and are taxing such goods and services at higher rates than the limit imposed. In these cases, taxpayers and leaders should rely on the assistance of their legal and tax advisors in order to protect their rights appropriately.

Tax Documents

It is also worth mentioning the following changes in the tax document, such as:

It is important to understand these changes for 2023 to able to properly validate tax documents, avoid eventual legal exposures, or even imminent questions and penalties.

Taxpayers should analyze the new regulations of each state in detail according to their specific activities. Take into consideration the economic, accounting, tax and even legal consequences involved, in addition to the benefits and special regimes eventually in use.


Please remember that Tax Matters 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 Tax Matters are those of the authors and do not necessarily reflect the official policy, position, or opinion of Vertex Inc.

Blog Author

Industry Influencer Ana Maciel

Ana Maciel

Senior Manager, Tax Research

See All Resources by Ana

Ana Maciel is a senior tax research manager responsible for new tax content that supports the Vertex Indirect Tax O Series solution in Brazil. Based in São Paulo, she has more than 24 years of experience in Brazilian indirect tax and has worked at Vertex for over 11 years. Previously, she worked as a tax advisor to multinational companies in Big 4 accounting firms. Ana holds a B.S. in law and a B.S. in business administration, as well as a post-graduate degree in international trade from Universidade Paulista.

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