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Electricity & VAT in Brazil

Rafael Herzberg's picture
Consultant energy affairs Self employed

Rafael Herzberg- is an independent energy consultant, self-employed (since 2018) based in São Paulo, Brazil* Focus on C level, VPs and upper managers associated to energy related info, analysis...

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  • May 27, 2022
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Electricity & VAT in Brazil

This week the theme "reduction of ICMS (the Brazilian VAT) on selected energy sources" is on the agenda of the Legislature. It should pass as per the preliminary reports.

The central question of this reduction, which is in principle very welcome as it will help to alleviate the cost of energy for consumers (business, institutional and residential), is: how will it be made possible?

If there is an equivalent reduction in government expenditure, great! It would mean that a challenge is being solved in the right way. Keeping the public budget unchanged.

But... if it is for the populist ways that Brazil has used for decades - especially on the eve of elections - of "bursting the original budget", once again, it would be just a decoy. In the end, there would be inflation that would affect everyone.

The question remains: what will actually be done?

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