What is Tax Reform and what changes with IBS and CBS taxes?

The Brazilian Tax Reform was recently approved with the aim of reducing tax complexity in the country and increasing fiscal transparency. Complementary Bill (PLP) 68/2024 unifies several taxes into a new structure and establishes changes in collection. Are you prepared for the transition? Invent Software is here!

To better understand what the reform is, the main points and the taxes that will be implemented: the Tax on Goods and Services (IBS) and the Contribution on Goods and Services (CBS), continue reading!

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What is Tax Reform?

The Brazilian tax system is known for its high bureaucracy, which often confuses both citizens and companies.

With the tax reform, a proposal was made simplification of the current system, to facilitate collection and reduce operational costs with taxes, benefiting both the business sector and consumers.

The main point of the reform is the unification of five taxes (ICMS, ISS, IPI, PIS and Cofins), which creates new forms of collection on goods and services and brings updates to companies and entrepreneurs in the country!

Aiming at tax regularity, we are prepared for the changes that begin in 2026.

Main Points of the Reform

Os tributos CBS e IBS serão testados nacionalmente a partir de 2026.

Essas foram as mudanças na versão aprovada pela Câmara dos Deputados, em dezembro:
✅ Devolução de 100% da CBS e 20% do IBS para serviços essenciais (energia, água, gás, telecom).
✅ Redução de tributos para planos de saúde de animais e medicamentos.
✅ Turistas estrangeiros terão devolução de impostos em compras no Brasil.
✅ Manutenção da alíquota de 8,5% para Sociedades Anônimas de Futebol (SAF).

1. Replacement of Taxes by IBS and CBS

A reforma unifica cinco tributos em dois principais: o IBS e o CBS. O IBS é de competência compartilhada entre estados, municípios e o Distrito Federal, enquanto o CBS é federal. Com isso, a estrutura tributária deixa de fazer distinção entre bens e serviços, facilitando o cálculo e a aplicação dos impostos e reduzindo a burocracia fiscal. No plano inicial, que segue para aprovação presidencial, o CBS deve substituir PIS, COFINS e IPI, enquanto o IBS deverá substituir o ICMS e ISS.

2. Taxation at the Place of Consumption

Another innovation of the reform is the redirection of taxes to the place where the good is consumed, not where it is produced. This creates a more equitable collection system between states, promoting a fair distribution of revenue and encouraging investment in different regions.

3. Creation of the Regional Development Fund

To mitigate regional economic disparities and stimulate development in less favored areas, the Regional Development Fund was established. This fund aims to attract companies to areas where economic activity is lower, offering support and incentives that strengthen fiscal balance between regions.

All these points were covered in our Live on Tax Reform, did you watch it?

But after all, what changes with the implementation of IBS and CBS?

IBS and CBS are structured based on Value Added Tax (VAT), widely adopted in Europe and other countries, where taxes are applied throughout the production chain and are passed on to the end consumer. This new Brazilian model should bring significant changes for companies and citizens, including:

1. Tax reform promises simplicity and clarity

With the unification of taxes, the system becomes easier to understand and manage. Transparency in the amounts paid in taxes also allows taxpayers better visualize where each portion of the money raised goes, simplifying understanding for companies and citizens.

2. Stimulating Investment and Entrepreneurship

A less complex system tends to promote a more dynamic business environment conducive to new investments. With fewer bureaucratic barriers, companies of all sizes can focus on growth and innovation, strengthening entrepreneurship and competitiveness.

3. Reduction of Tax Evasion

Simplifying and centralizing taxes makes it easier to monitor and combat tax evasion. A more transparent and monitorable system helps prevent illegal practices, ensuring greater revenue and allowing the government to invest more in areas such as education, health and infrastructure.

4. Equity and Social Justice

The reform also aims at a fairer tax distribution. With the simplification of taxes and collection at the point of consumption, collection tends to be more equitable, promoting a fair tax burden and collaborating to reduce regional inequalities.

5. Predictability for Business

Clear rules provide legal certainty, allowing companies to make long-term plans with greater peace of mind. This benefits both the private sector and the economic stability of the country as a whole.

Details of Complementary Bill (PLP) 68/2024

Tax reform, represented by PLP 68/2024, will have a direct impact on Brazilian companies. Check out our summary of the complementary law:

• New calculation basis: PLP 68/2024 redefines the rules for the calculation basis of federal, state and municipal taxes, seeking simplification and efficiency with the new taxes, IBS and CBS.
• Unification of taxes: establishes the creation of taxes on consumption, replacing taxes such as ICMS, ISS, PIS and Cofins.
• Impacts for companies: The project introduces a series of adjustments that require companies to adapt to ensure compliance with the new standards.
• Gradual transition: The project foresees a transition phase for adapting to the new tax model, allowing companies to adjust over time without abrupt impacts.
• Implementation deadlines: consumption tax reform will be implemented in phases, with the unification of taxes starting in 2026. By 2032, several taxes will be eliminated or replaced by new taxes, with gradual transitions for government and companies to adapt their systems.

These changes seek to reduce bureaucracy in the business environment and create a fairer and more transparent tax system for everyone.

Conclusion

The implementation of Tax Reform promises to simplify the system, reduce costs and benefit both companies and consumers, but Is your company prepared for this change?

With the TaxPlus tax module, natively integrated with SAP® Business One, your company will be able to consolidate and transmit all tax obligations in an automated and secure manner.

Get ahead and keep your tax management system up to date with the new requirements that begin in 2026. Talk to our team of experts now!