Brazil has introduced a new way to support low-income families with its “cashback on taxes” system.

This initiative, part of a tax reform approved by President Luiz Inรกcio Lula da Silva, aims to ease the burden on those who struggle the most.

Here’s a breakdown of how it works, who qualifies, and why it matters.

Who Qualifies for Tax Cashback?

Tax Cashback in Brazil
Check out if you are eligible and how much money you can get back.
  • Families registered in Cadรšnico, the governmentโ€™s registry for social programs.
  • Households earning up to half the minimum wage per family member. For example, if the minimum wage is R$1,518, a family of four must earn no more than R$3,036 to qualify.

The cashback on taxes, combined with Bolsa Famรญlia, offers crucial support to low-income families.

What Services Are Covered?

Eligible families can receive tax refunds on payments for:

  • Electricity
  • Water
  • Sewage
  • Gas cylinders
  • Telephone and internet services

For other goods and services, refunds will be at least 20% of the taxes paid. Local governments can increase this percentage.

How Much Money Will Be Returned?

The reform introduces two new taxes that are eligible for cashback:

  1. CBS (Contribution on Goods and Services) โ€“ 100% refund for essential services.
  2. IBS (Tax on Goods and Services) โ€“ At least 20% refund, with states and municipalities allowed to increase it.

For example, if a family spends R$100 on electricity with a 25% combined tax rate (R$25 in taxes):

  • They will get R$20 back from CBS (100% refund).
  • An additional R$5 (20% refund) may be refunded from IBS.
  • Total cashback: R$25.

How to Receive the Cashback

  • Eligible families are automatically enrolled in the program.
  • Refunds will appear as credits or discounts on bills for utilities.
  • Families can opt out if they do not want to participate.

When Does It Start?

  • Cashback for CBS will begin in 2027.
  • Cashback for IBS will start in 2029.
    These timelines give authorities time to prepare the necessary systems.

Why Is It Important?

Consumption taxes affect low-income families more because they spend a larger part of their income on basic needs.

For instance, someone earning the minimum wage pays 0.41% of their income in tax when buying a R$25 bag of rice, while someone earning R$10,000 pays only 0.062%. This program aims to reduce this imbalance.

Challenges Ahead

  1. Implementation: Developing a system to manage and distribute refunds efficiently.
  2. Awareness: Ensuring all eligible families know about the program.
  3. Monitoring: The Federal Revenue Service will oversee CBS refunds, while a management committee will handle IBS refunds. Transparency will be key to avoid misuse.

Conclusion

The cashback on taxes initiative is a significant move to reduce inequality. By refunding taxes on essential goods and services, the program aims to provide relief to millions of low-income families.

If implemented well, it could make a meaningful difference in their lives.

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Miloลก Nikolovski
Miloลก Nikolovski
I am Milos Nikolovski, a journalist who moves with curiosity through stories that matter. I cover politics, food, culture, economics, conflict, and the small details that shape how people live. I spend time on the ground, speak directly to those at the center, and follow facts wherever they lead. I write about markets and ministers, street food and foreign policy, everyday life and shifting power. My work stays close to people and far from noise. I believe good journalism speaks clearly, asks better questions, and never loses sight of the bigger picture.
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