The Brazilian Federal Senate rejected a proposal that sought to exempt international airline tickets from the future Value-Added Tax (VAT), an integral part of the consumption tax reform.
The proposal, presented through a highlight and requiring 41 votes to pass, received only 37 votes in favor, leading to its rejection. With this decision, the main regulatory project of the tax reform now returns to the Chamber of Deputies for further evaluation.
Tax Reform
Currently, the tax reform includes provisions for taxing outbound international airline tickets, while maintaining a tax exemption for return tickets. The rejected proposal aimed to exempt both outbound and return journeys from taxation, according to the associated media outlet Aeroin.
Senator Angelo Coronel (PSD-BA), who authored the highlight, argued that international aviation in Brazil is already exempt from ICMS and PIS/COFINS, aligning with international practices that, according to him, bring significant economic benefits by avoiding taxes on international air passenger transportation.
The Proposal Was Rejected
On the other hand, the federal government’s economic team opposed the proposal for full exemption, pointing out that airlines already benefit from tax advantages on fuel for international flights and onboard services. Currently, there is already a partial exemption for return tickets from abroad.
Senator Eduardo Braga (MDB-AM), the rapporteur for the project, also positioned himself against the amendment, arguing that the proposed regulation already offers advantages to airlines.
He highlighted that the text includes benefits for aviation kerosene, which represents 50% of ticket costs, and for catering services, which account for 15% of ticket costs. Additionally, more than 60% of international tickets are purchased with miles, which are exempt from taxes. Braga also mentioned incentives for aircraft leasing.
