From Complexity to Clarity: How BRICS Nations Shape Their GST and VAT Systems

Indirect taxation is one of the strong engines that keep a nation running. Whenever you buy a cup of tea at a roadside vendor, a train ticket from online, a pair of shoes from the shop, or even a mobile phone from any e-commerce platform, a small percentage of what you pay goes to the government’s treasury. Governments are able to provide welfare programs, build roads, construct schools, and improve the healthcare system because of Indirect Taxes, which are collected in the name of Value Added Tax (VAT) and Goods and Services Tax (GST). In contrast to direct taxes, which are paid by people or businesses according to their income, indirect taxes are distributed among all people based on their consumption. 

BRICS is not a single powerful country, but a bloc of powerful emerging economies like Brazil, Russia, India, China, and South Africa, which has recently expanded to include Egypt, Ethiopia, Iran, and the United Arab Emirates (UAE), as well as Indonesia.  These countries, along with new country entrants, collectively contribute 44% to global GDP.  Indirect taxes are more than a fiscal tool; they are a key contributor to GDP and economic growth. A well-designed system helps reduce evasion, broadens the tax base, and supports inclusive development. In simple words, indirect taxes are the silent partners in a nation’s growth story. 

Two Slabs, One Success - India’s GST Reform

In a landmark reform, India’s Goods and Services Tax (GST) witnessed a remarkable decision when the GST Council approved a comprehensive rationalisation of tax slabs in its 54th council meeting. Now, GST rates of 5%, 12%, 18% and 28%  are reduced to only two GST rates. This changed structure was simplified to two primary slabs of 5% and 18% along with a special 40% rate on luxury and sin goods (effectively replacing part of the earlier cess structure). The Council’s stated rationales are with the objectives of compliance simplification, easing the cost of living and strengthening the economy.

This sweeping move, hailed as a “Diwali gift for the nation,” is expected to benefit households, farmers, small businesses, and large corporations alike. And the GST structure changes are essential for increasing domestic demand and benefiting companies in offsetting the effects of the US 50% tariff on Indian goods. India's GST system had record gross collections of ₹22.08 lakh crore in FY 2024–25, which is a continuation of the steady growth path since it was first introduced in 2017. Monthly collections also reached new highs in April 2025, collecting a monthly gross of ₹2.37 lakh crore. Stronger compliance, broader taxpayer coverage (e-invoicing, digital reconciliation) and a more formalised economy are the drivers for the revenue momentum.  

Brazil - Rewriting the VAT to fix fragmentation and cascading taxes

Brazil is starting one of the most comprehensive tax reforms in its history, switching from a complicated system of indirect taxes to a more straightforward and simple dual VAT system. The ICMS, a state VAT that ranges from 17% to 19% (with interstate rates from 4% to 12%); the ISS, a municipal services tax that ranges from 2% to 5%; federal contributions like PIS and COFINS, which are levied at a combined 3.65% (cumulative regime) or 9.25% (non-cumulative regime); and the IPI, an excise on manufactured goods, which has rates ranging from 0% to 300%, depending on the product.  This complex system has come under fire for discouraging investment, raising compliance costs, and creating cascading taxes. In accordance with international VAT standards, Brazil will gradually remove these taxes starting in 2026 and impose two new levies: the Contribuição sobre Bens e Serviços (CBS), which is set at about 8.8%, and the Imposto sobre Bens e Serviços (IBS), which is set at about 17.7%. This will bring the country's overall VAT rate very close to 28%. Additionally, a selective excise will target products that are harmful to the environment and human health. The antiquated system will undergo a comprehensive makeover by 2033 in order to streamline taxes, improve transparency, and lessen distortions for both consumers and corporations.

Russia - steady headline rate, tweaks to exemptions and administration

Russia operates a stable Value Added Tax system anchored by a 20% standard rate, with reduced rates for essentials, medical supplies, and zero-rating for exports. Unlike Brazil or India, it has not pursued major restructuring, but instead focuses on compliance and enforcement. In 2025, the Federal Tax Service reported strong VAT collections, underlining its role as a key federal revenue source. Recent bulletins clarified rules on exemptions and reduced rates while tightening oversight in retail, pharmaceuticals, and exports. This stability provides businesses with predictability for long-term planning, though compliance accuracy remains a central priority.

China’s Multi-Tier System

China has undergone a major transformation in its indirect tax regime over the past decade, moving from a fragmented system of business tax and VAT to a unified Value Added Tax framework. Until 2016, services were taxed under the Business Tax (BT) while goods were subject to VAT, creating distortions and double taxation. In 2016, China completed its landmark reform by abolishing BT and expanding VAT to cover all sectors, including finance, real estate, construction, and lifestyle services. The VAT system today is anchored by a 13% standard rate, with reduced rates of 9% and 6% for specific goods and services, and zero-rating for exports. Recently, authorities further simplified compliance through digital invoicing, e-filing, and targeted tax relief for small businesses, while signalling no imminent large-scale rate overhaul. The shift has not only aligned China’s system more closely with OECD VAT practices but also improved transparency and reduced cascading taxation.

South Africa: Stability at Fixed Rate 

South Africa applies a single VAT rate of 15%, with a catalogue of zero-rated essentials. The 2025 national budget process initially proposed incremental VAT increases (to 15.5% from May 1, 2025, and a further rise to 16% in April 2026) to shore up public finances. However, following public debate and political pushback, the Treasury reversed course in April 2025 and introduced legislation to keep the VAT rate at 15% for the period under consideration. 

Taxation System for Growth

The journey of GST across BRICS shows how indirect taxation is more than a fiscal tool; it is a mirror of each nation’s economic priorities. India’s bold move to two slabs has combined simplicity with resilient revenues, while Brazil is rewriting its fragmented system, China is codifying its rules, Russia values stability, and South Africa balances fiscal needs with social realities.

For India, the message is clear: simpler rules, fairer rates, and stronger compliance can widen the tax base without burdening the common citizen. As GST 3.0 takes shape, it promises to make taxation not just a source of revenue but a driver of trust, transparency, and inclusive growth.

Table showing the current applicable indirect tax rates