Government submits bill of law of CBS which shall replace PIS and COFINS

The Brazilian Government submitted on Tuesday (July 21) to the National Congress a bill of law that creates the Social Contribution on Operations with Goods and Services (CBS). CBS shall replace PIS-payroll. as well as PIS/ OFINS on revenues and PIS/COFINS on imports. The unification of PIS and COFINS is the first part of a broader tax reform that the government intends to approve later this year. The objective is to simplify the tax system and improve the business environment.

Those are some of the highlights:

– CBS will be charged on single rate of 12%, both on revenue and imports of goods and services; the single-phase regime will be applicable only to some products and the cumulative regime will be extinguished
– Several tax benefits will be extinguished. ‘Cesta Basica’ (food products) and Manaus Free Trade Zone remain with different tax treatment
– CBS will not apply on exports and the corresponding credits can be maintained excess credits can be used to offset other taxes or reimbursed
– Digital platforms now have tax liability in some situations. Digital platforms and suppliers resident and domiciled abroad will be required to register to be able to collect CBS in import operations
– The tax will be calculated adding to its tax basis and credits will be calculated based on tax documents upon acquisition of goods and services
– PIS and COFINS credits can be used to offset CBS

The new CBS, if approved, goes into effect 6 months after the publication of the law. 
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