Massive Tax Changes in Brazil Set to Roil Consumers Already Struggling

Complaints about Brazil’s confusing tax system have spanned decades and multiple administrations. The latest reforms were passed in December 2023 after nearly five years of debate. They include a value-added tax (VAT) of up to 27.5 percent that will put Brazil alongside Hungary and Sweden as countries with the highest consumption tax rates in the world. The United States doesn’t have a VAT, but states have a sales and use tax that varies between 0 and 9.5 percent. Brazil’s VAT tax will begin to be phased in by 2026 and is currently anticipated to take full effect over a seven year period. The move has drawn mixed reactions from Brazilians, including criticism that a high VAT will deal a harsh blow to the country’s low income earners. Standard VAT rates of around 20 percent aren’t uncommon in European countries, but those nations don’t have the same level of poverty as Brazil....