Split payment in Brazil: how automatic VAT collection will affect cash flow

Split payment in Brazil is the mechanism by which, when a customer pays electronically, the CBS and IBS portion of the price is separated automatically and sent to the tax authorities, and the supplier receives only the net amount. The main effect is on cash flow: suppliers lose the working capital they currently hold between receiving payment and paying the tax. According to the Federal Revenue Service, voluntary use should start in 2027 and mandatory use is expected from 2028.

How does split payment work?

1. The supplier issues an electronic invoice showing CBS and IBS.
2. The customer pays by an electronic means, such as Pix, bank slip (boleto) or card.
3. The payment service provider checks the tax authorities’ systems.
4. The tax portion is withheld and transferred directly to the Federal Revenue Service and the IBS Management Committee.
5. The supplier receives the net amount.

Under the standard procedure, the amount withheld considers the tax due on the transaction and credits already available to the supplier. Under the simplified procedure, fixed percentages set by the tax authorities apply. Complementary Law 227/2026 allowed any taxpayer to opt for the simplified procedure, not only in sales to final consumers.

When will it apply?

The law provides for gradual implementation. In an interview published in September 2026, the Federal Revenue Service stated that the technical infrastructure should be ready in early 2027, with gradual adoption by payment method, and that mandatory use is expected to begin in 2028. Until then, tax continues to be paid through regular tax payment slips. The schedule depends on joint regulations still to be issued and may change.

What is the impact on cash flow?

Today, a Brazilian company receives the full price and pays consumption taxes weeks later. That gap works as an interest-free source of working capital. Split payment removes it. Companies that sell on cash terms and have thin margins will feel the effect most.

There is also a credit effect. Complementary Law 214/2025 generally conditions the buyer’s credit on the supplier’s payment of the tax. Under split payment, payment and credit are aligned automatically; when tax is paid outside split payment, buyers depend on their suppliers’ compliance.

Why it matters for foreign-owned groups

• Treasury: Brazilian subsidiaries may need more working capital or intercompany funding.
• Intercompany pricing: transfer pricing and service fees should be reviewed together with the new VAT flows.
• Payment terms: customer and supplier contracts may need new clauses on tax and payment methods.
• Systems: global ERPs must reconcile net receipts, withheld tax and credits in Brazil.
• Supplier due diligence: tax compliance of Brazilian suppliers affects credits.

Practical checklist

1. Model monthly cash flow with CBS and IBS withheld at payment.
2. Assess whether the standard or simplified procedure fits the business.
3. Review long-term contracts and tax change clauses.
4. Align banking partners and payment providers on implementation timelines.
5. Prepare reporting so that headquarters understands the new cash profile of the Brazilian entity.

Frequently asked questions

Does split payment increase the tax burden?

No. It changes when and how tax is collected, not the rate. The effect is financial.

Does it apply to cross-border payments?

Imports of goods and services are subject to CBS and IBS under specific rules. How split payment applies to each type of cross-border flow depends on regulations still being finalized.

Will invoices change?

Yes. Electronic invoices already show CBS and IBS fields in the 2026 test phase, and these fields drive the split payment calculation.

How Chambarelli Advogados can help

Our Corporate Taxation team and our Foreign Desk model split payment effects on Brazilian subsidiaries and help finance teams adapt contracts, treasury and systems. Book a meeting with one of our partners.

Informational content, updated October 2026. It does not replace advice on your specific case.