State Law 16005/2015 reduced the rate of the tax on generic
pharmaceuticals and raised the rate on beer and tobacco-related
products. In addition, State Law 16006/2016 created additional
rates to be charged on transactions with beer- and
tobacco-related products, in order to finance measures to
combat poverty. Both laws will come into force 90 days after
their publication in the Official Gazette of the state of
São Paulo, which occurred on November 25 2015.
Firstly, we should point out that State Law 16005/2015,
published on November 25, sets forth that, as of February 24
2016, the ICMS rates on transactions with generic drugs within
São Paulo state will be reduced from 18% to 12%.
According to Federal Law 6360/1976, a generic pharmaceutical
is a medicine similar to, or interchangeable with, a reference
product or an innovative product, and is usually produced after
the expiration of the patent or the end, by any other means, of
the rights of exclusivity of the branded product. After the
efficacy, security and quality of the generic drug is tested,
it is classified by the relevant authorities under the
Brazilian classification or, if there is no correspondence,
under the international classification recommended by the World
Health Organisation (WHO).
The new law also sets forth updated ICMS rates for
transactions with beer and tobacco-related products within the
state. To this effect, the 18% rate for transactions with beers
will be raised to 20% and the 25% rate for transactions with
tobacco-related products will be raised to 30%.
In addition to such tax rate increases, State Law 16006/2015
created the State Fund to Fight and Eradicate Poverty (FECOEP),
which aims at providing the state population with decent levels
of subsistence. It comprises programmes and actions related to
nutrition, habitation, education, health and other actions with
important social interest, addressed to improve the quality of
life of the population. It also includes actions to protect
children and adolescents and promote family agriculture.
Said law sets forth that the main resources of FECOEP will
be a portion of the ICMS collected by the state, calculated
with an additional 2% rate on transactions with beer and
Accordingly, considering the ICMS rate increases established
by State Law 16005/2015, transactions with beer and
tobacco-related products will be subject to a total ICMS rate
of 22% and 32%, respectively, with 2% destined for FECOEP.
Júlio M. de Oliveira
(email@example.com), Rogério Gaspari
) and Gabriel Caldiron Rezende (firstname.lastname@example.org
) are members of Machado Associados’
Indirect Tax team.