Private education and health services will have taxes reduced by 60% | Economy

Reductions are included in the complementary billMarcello Casal Jr/Agência Brasil

Published 04/28/2024 10:15

In order to avoid price increases after the tax reform, private education and health services will have their Value Added Tax (VAT) reduced by 60%. Activities with a short production chain, such as cultural, audiovisual, journalistic and event services, will also have tax reduced to the same extent, so as not to be punished with an excessive increase in the tax burden with the end of cumulative taxation (cascade charging).

The reductions are contained in the complementary bill that regulates the tax reform on consumption, sent to Congress last Wednesday (24). Although the constitutional amendment promulgated at the end of last year established general services that would have a reduced rate, the government’s proposal detailed the activities.

During discussions on tax reform, the government and Congress agreed that, as they directly provide services to consumers and are labor intensive, the sector would be punished by charging the full rate, which will average 26.5%. This would result in high prices being passed on to consumers.

One of the pillars of the tax reform is the end of cumulative activity, through which the company will have a reduction in taxes paid on inputs, which avoids multiple taxation of the same good throughout the production chain. This system, created in France in the 1960s and partially in force in Brazil since the end of the same decade, benefits industry, with a long production chain, but harms services, with a short production chain.

In the case of direct provision of services to consumers, who are at the end of the chain, the problem is aggravated because tax credits are almost never deducted. In this way, the full rate of 26.5% will be reduced to 10.6%, reducing the impact on the consumer.

The government’s proposal will now be discussed in Congress in the coming months, with a vote expected in the Chamber by July and by the end of the year in the Senate. During the process, parliamentarians will be able to include or remove services with reduced rates.

Check out health and education services with reduced rates:

• early childhood education, including daycare and pre-school;

•elementary School;

•high school;

•secondary level technical education;

•education for young people and adults aimed at those who did not have access to or continued studies in primary and secondary education at the appropriate age;

•higher education, comprising undergraduate, postgraduate, extension and sequential courses and programs;

•teaching linguistic systems of a visual-motor nature and tactile writing;

•teaching native languages ​​of original peoples;

•special education aimed at people with disabilities, pervasive developmental disorders and high abilities or giftedness, isolated or added to any of the education stages;

•surgical services;

•gynecological and obstetric services;

•psychiatric services;

•services provided in intensive care units;

•emergency care services;

•hospital services not classified in previous subheadings;

•medical clinic services;

•specialized medical services;

•dental services;

•nursing services;

•physiotherapy services;

•laboratory services;

•diagnostic imaging services;

•human biological material banking services;

•ambulance services;

•birth and postpartum care services;

•psychology services;

•health surveillance services;

•epidemiology services;

•vaccination services;

•speech therapy services;

•nutrition services;

•optometry services;

•surgical instrumentation services;

•biomedicine services;

•pharmaceutical services;

•care and assistance services for the elderly and people with disabilities in reception units.

Check out the services of national, artistic, cultural, event, journalistic and audiovisual productions with a reduced rate:

•production services for television programs, videotapes and films;

•radio program production services;

•news agency services for newspapers and periodicals;

•news agency services for audiovisual media;

•audiovisual production, support and related services not classified in previous subheadings;

•organizing and promoting live artistic performances;

•production and presentation services for live artistic performances;

•artistic performance services;

•services of authors, composers, sculptors, painters and other artists, except those engaged in artistic activities;

•museum services;

• assistance services and organization of conventions, business fairs, exhibitions and other events;

•licensing of rights to literary works;

•licensing of copyright of cinematographic works;

•licensing of copyright of journalistic works;

•licensing of related rights of performers in audiovisual works;

•licensing of related rights of producers of audiovisual works;

•licensing of rights to audiovisual works intended for television;

•licensing of rights to musical works and phonograms;

•temporary assignment of rights to literary works;

•temporary assignment of copyright of cinematographic works;

•temporary assignment of copyright of journalistic works;

•temporary assignment of related rights of performers in audiovisual works;

•temporary assignment of related rights of producers of audiovisual works;

•temporary assignment of rights to audiovisual works intended for television;

•temporary assignment of rights to musical works and phonograms.