The Tax Reform transition, scheduled to begin in 2026, will bring significant changes to Brazil’s tax structure, with the unification of federal, state and municipal taxes into two new taxes: the Contribution on Goods and Services (CBS) and the Tax on Goods and Services (IBS).
Transition stages
The transition will take place in stages:
– 2026: Start of collection of CBS and IBS with test rates of 0.9% and 0.1%, respectively.
– 2027: Extinction of federal taxes PIS and Cofins and increase in the CBS rate to the reference value defined by the government. The Selective Tax (IS) will begin to be levied, and the IPI will have its rate reduced to zero, except for products manufactured in the Manaus Free Trade Zone.
– 2029 to 2032: Gradual reduction in state and municipal taxes (ICMS and ISS), with rates falling from 90% to 60%.
– 2033: Complete implementation of the new tax system and total extinction of old taxes.
Main changes
The reform aims to simplify the tax burden by unifying several taxes into just two: the CBS, which will replace PIS and COFINS under federal management, and the IBS, which will integrate ICMS and ISS with shared management between states and municipalities. It will be levied at destination, eliminating the cumulative nature of taxes.
In addition, the new Selective Tax (IS) will be introduced to discourage the consumption of products that are harmful to health or the environment, such as alcoholic drinks and tobacco products.
Guidelines for adaptation
To adapt to the reform, companies must plan ahead, assessing the impacts of the new legislation and developing strategies to adapt. It is essential to train employees on the new tax rules to ensure compliance.
Finally, it is important to update management systems, modernizing them to meet the new tax requirements and avoid operational problems. Early adaptation will allow companies to adapt more safely to the changes and take advantage of the opportunities offered by the new tax system.
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