Brazil Senate to Review Church Tax Immunity Bill on Consumption Taxes

The constitutional amendment known as the "PEC das Igrejas" seeks to extend Brazil's existing tax immunity for churches and related religious entities to consumption taxes. The proposal, which would exempt purchases of goods and services used by temples, creches, therapeutic communities and other faith‑based facilities, was approved by the Chamber of Deputies in two votes (385‑85 and 368‑96) and now moves to the Senate, where it requires a three‑fifths majority.

Finance Minister Dario Durigan warned that the bill could raise the national value‑added tax rate by about one percentage point in 2027, increasing the rate from 27.5% to roughly 28.5% and reducing annual fiscal revenue by an estimated R$5.5‑7 billion. He described the amendment as a “pauta‑bomba,” urging parliamentarians to avoid approving measures with large fiscal impact amid high interest rates and global uncertainty. Durigan also highlighted concerns about controlling which products would qualify for exemption and cited alternative proposals, such as a rural debt renegotiation plan projected to cost up to R$800 billion over ten years.