Brazil's tax reform criticised for added complexity and fiscal centralisation

Professor Ives Gandra da Silva Martins addressed the XXXIX Brazilian Congress of Tax Law, highlighting that the recently approved consumption tax reform alters parts of four constitutional articles (IPI, ICMS, ISS, contributions) without simplifying the system. He argued that the legislation triples the constitutional rules for these taxes, expanding the National Tax Code from 218 articles to over 700 articles for just four taxes. The reform, set to take effect on 1 January 2027 and to merge state and municipal taxes by 2029, is said to weaken fiscal autonomy of states and municipalities, placing them under a federal Management Committee. Critics at the congress, including Misabel Derzi, Rover Carrazza and Humberto Ávila, warned of increased tax burden, higher compliance costs for businesses, and a shift of decision‑making power to the central government. Martins announced an upcoming book, “Equívocos e fragilidades da reforma tributária,” to detail these concerns.

The debate underscores fears that the reform will complicate compliance, centralise revenue, and erode the federative pact, with significant implications for Brazil's legal and economic landscape.