Brazil tax reform timeline 2026–2033: year-by-year changes
Guilherme Chambarelli
Published on
3 min read
In this article
The Brazil tax reform timeline runs from 2026 to 2033. In 2026, the new CBS and IBS are tested at symbolic rates. In 2027, CBS starts at its full rate, PIS and Cofins are abolished, IPI drops to zero for most goods and the Selective Tax is scheduled to begin. From 2029 to 2032, ICMS and ISS are reduced step by step while IBS increases. In 2033, the new dual VAT operates on its own.
Key points
- Legal basis: Constitutional Amendment 132/2023 and Complementary Laws 214/2025 and 227/2026.
- 2026: test rates of 0.9% (CBS) and 0.1% (IBS), offset against PIS and Cofins.
- 2027–2028: full CBS; IBS at a 0.1% test level.
- 2029–2032: ICMS and ISS at 90%, 80%, 70% and 60% of their rates.
- 2033: ICMS and ISS abolished; IBS at full rate.
Year-by-year overview
| Year | Main changes |
|---|---|
| 2026 | CBS 0.9% and IBS 0.1% shown on invoices as a test; existing taxes unchanged |
| 2027 | CBS at full rate; PIS and Cofins abolished; IPI at zero except for goods linked to the Manaus Free Trade Zone; Selective Tax scheduled to start |
| 2028 | IBS still at 0.1% (0.05% state and 0.05% municipal) |
| 2029 | ICMS and ISS at 90% of their rates; IBS increases accordingly |
| 2030 | ICMS and ISS at 80% |
| 2031 | ICMS and ISS at 70% |
| 2032 | ICMS and ISS at 60% |
| 2033 | ICMS and ISS abolished; full dual VAT |
2026: the test year
Companies under the regular regime show CBS and IBS on invoices at symbolic rates. The amounts are offset against PIS and Cofins, and Complementary Law 214/2025 waives payment for taxpayers that comply with the ancillary obligations. Simples Nacional companies do not apply the test rates. The real purpose is to test systems: invoicing, ERPs and product classifications.
2027: the federal switch
PIS and Cofins disappear, and CBS is charged at its full rate. PIS and Cofins credit balances recorded in the company’s digital bookkeeping can be used against CBS or other federal taxes or refunded, under the conditions of the law, and there is a presumed credit on inventory held at the changeover. IPI is reduced to zero except for goods also produced with incentives in the Manaus Free Trade Zone. The Selective Tax is scheduled for 2027, but as of October 2026 its rates still depended on a specific law, which may affect when collection actually starts. Split payment also begins to be phased in, with mandatory use expected from 2028, according to the Federal Revenue Service.
2029–2032: from ICMS and ISS to IBS
ICMS and ISS rates fall by one tenth per year compared with 2028 levels, and IBS rises to replace the lost revenue. Companies run two systems in parallel, with duplicated compliance. State ICMS incentives lose effect gradually; a compensation fund covers certain incentives granted until 2032, under legal conditions. Complementary Law 227/2026 regulates the use of ICMS credit balances existing at the end of 2032.
2033: the final system
Consumption taxation is carried out by CBS, IBS and the Selective Tax. The sharing of IBS revenue between states and municipalities continues to transition for a longer period, without direct effect on taxpayers.
What foreign-owned companies should plan for
- By end-2026: review PIS and Cofins credits, update systems and contracts, and model prices with CBS.
- 2027–2028: operate CBS, prepare for split payment and review intercompany flows.
- 2029–2032: manage two systems, plan the use of ICMS credits and revisit supply chain decisions as state incentives fade.
Frequently asked questions
When will the final rates be known?
The Federal Senate sets reference rates during the transition. Official estimates point to a combined CBS and IBS rate of 26% to 28%, but these are estimates.
Does the reform affect corporate income tax?
No. IRPJ and CSLL remain. Separately, since 2026 dividends paid abroad are subject to 10% withholding under Law 15,270/2025, subject to tax treaties.
Can the timeline change?
The main dates are in the Constitution. Operational details, such as split payment and the Selective Tax rates, depend on further regulation.
How Chambarelli Advogados can help
Our Corporate Taxation team and our Foreign Desk build year-by-year transition plans for Brazilian subsidiaries, with pricing models, contract reviews and credit management. Book a meeting with one of our partners.
Informational content, updated October 2026. It does not replace advice on your specific case.
