Brazil's Tax Reform Expected to Raise Municipal Tourism Revenues

Brazil's tax reform will shift taxation to the destination of consumption, replacing the ISS (Service Tax) with the IBS (Goods and Services Tax). Under the new system, taxes on tourism‑related services such as lodging, food, transport and events will be collected by the municipality where visitors actually consume them, rather than by the city where the provider is based. The National Confederation of Municipalities (CNM) says this change should increase revenue for cities that host large numbers of tourists and allow a greater share of tourism‑generated wealth to remain locally. Implementation will be gradual, with transitional compensation mechanisms to mitigate short‑term fiscal impacts. The reform also proposes tax refunds on certain purchases made by foreign visitors to boost Brazil's competitiveness for international tourism.