Conflict of jurisdiction for the application of IBS between states and municipalities after PEC 132/2023

Abstract

This article examines the conflict of jurisdiction over the application of the IBS between states and municipalities following the enactment of Constitutional Amendment Proposal (PEC) 132/2023. The proposal for tax unification, as set forth in §1 of Article 156-A of the 1988 Federal Constitution, raises questions regarding the distribution of tax responsibilities. The main objective of this article is to discuss the practical significance of the changes introduced by PEC 132/2023 in the relationship between municipalities and states, identifying potential conflicts and seeking solutions to mitigate them. Through a doctrinal analysis, the article investigates how this redistribution of competencies could impact the autonomy of both municipalities and states, while exploring possible conflicts and alternatives to prevent overlapping fiscal jurisdictions. The exploratory research will rely on future findings related to IBS reform, in addition to qualitative analyses based on bibliographic and documentary reviews. Among the key findings, the tax reform aims to simplify, increase transparency, and promote equity within the fiscal system. The amendment proposes the creation of the IBS through a Supplementary Law, which will establish its legal framework (dual VAT system) and the formation of the IBS Management Committee. One of the primary challenges identified in the research is the determination of tax rates by each entity, which may raise concerns about potential fiscal disputes between municipalities and states.  Finally, the article discusses the relevance of these changes for tax law and their implications for fiscal justice among federative entities and taxpayers, seeking solutions to these conflicts.