CONSTITUTIONAL AMENDMENT 132/2023 AND ITS IMPACT ON TAX EXEMPTIONS

Abstract

This paper analyzes the impacts of Constitutional Amendment No. 132/2023 on the tax exemption regime in Brazil, considering the structural transformations resulting from the Tax Reform and its consequences for the federal balance. The research is based on a qualitative study, with a doctrinal and legislative focus, addressing the changes introduced by the creation of the Tax on Goods and Services (IBS) and the Contribution on Goods and Services (CBS), which replace the ICMS and ISS, transferring taxation to the destination. The work aims to examine (i) the progressive extinction of tax exemptions and the impact on the revenue of federated entities; (ii) the role of the Tax or Financial-Tax Benefit Compensation Fund as a transitional instrument; and (iii) the challenges of reconciling tax simplification with the maintenance of regional development. It is concluded that Constitutional Amendment No. 132/2023 represents progress in the pursuit of a simpler, more transparent, and fairer tax system, by reducing tax competition and promoting greater balance among federated entities. However, its effectiveness will depend on adequate regulation and the ability of entities to adapt, in order to reconcile legal certainty, fiscal justice, and economic sustainability in the new model of consumption taxation.