Tax Reform: what changes?
EC 132/2023 redesigned Brazil's consumption tax system and LC 214/2025 set the scale. This is the map — what is already defined, what awaits regulation and what changes in practice, with a source for every claim.
Brazil's tax reform (EC 132/2023, regulated by LC 214/2025) replaces PIS, COFINS, ICMS and ISS with a dual VAT — CBS (federal) and IBS (state and municipal) — and creates a Selective Tax. 2026 is the test year (0.9% + 0.1%), charging starts in 2027, and the old taxes end in 2033. Every claim cites its source; case law comes from the RAGJur index (115 million rulings).
1. Scope and what it replaces
Five taxes (PIS, COFINS, IPI, ICMS, ISS) become three: CBS replaces PIS/COFINS, IBS replaces ICMS/ISS, and the Selective Tax targets goods and services harmful to health or the environment. Full non-cumulative financial credit, destination taxation and export exemptions (EC 132/2023 · LC 214/2025).
2. Transition timeline (year by year)
| Year | What happens |
|---|---|
| 2026 | Test year: CBS 0.9% · IBS 0.1% · regimes coexist · compliance duty · Simples election in Sep/2026 (Res. CGSN 186/2026) |
| 2027 | Charging begins · Selective Tax in force · IPI zero-rated (except Manaus Free Zone) |
| 2028–2032 | Progressive reductions and compensations · reference rates by the Senate |
| 2033 | Definitive extinction of ICMS, ISS, PIS and COFINS |
3. Sector and state-level impacts
Agribusiness: gradual loss of sectoral benefits, segment by segment. FIIs and Fiagros: CBS/IBS exemption secured by Congress (VET 7/2025, under PLP 108/24). The state matrix (reference rate, state calendar, local case law) is extracted from the RAGJur index.
4. What case law already decided
STJ · REsp 2145121
“O art. 16 da Lei Complementar 123/2006 trata do Simples Nacional e dispõe: a opção pelo Simples Nacional da pessoa jurídica enquadrada na condição de microempresa e empresa de pequeno porte dar-se-á na forma a ser estabelecida em ato do Comitê Gestor, sendo irretratável para todo o ano-calendário.” […] “De acor
STJ · REsp 2194920
“A atividade atípica/imprópria de ganho de capital decorrente de alienação de quotas de FII”s em operações de FoF”s sujeita-se à incidência de IRPJ com fulcro no art. 18 da Lei 8.668/1993.” […] “Correta a interpretação conferida pela Solução de Consulta COSIT 181, de 25 de junho de 2014 no sentido de que os gan
Source: RAGJur index (115M+ rulings).
5. Compliance steps and next actions
- Classify operations and test the 2026 assessment.
- Decide the Simples election by Sep 30, 2026.
- Review tax-adjustment clauses in legacy contracts.
Free ebooks (in Portuguese, with real STJ anchors)
Frequently asked questions
Are CBS and IBS cumulative?
No: full non-cumulative financial credit, under EC 132/2023 and LC 214/2025.
When does charging begin?
2026 is the test year (CBS 0.9%, IBS 0.1%); effective charging and the Selective Tax start in 2027; full extinction of ICMS, ISS, PIS and COFINS happens in 2033.
What happens to IPI?
Zero rate from 2027, except for Manaus Free Trade Zone products.
Where do the citations come from?
From the RAGJur index, 115 million Brazilian court rulings. Every legal claim cites its source; missing anchors are explicitly marked as pending.
What changes for Simples Nacional companies?
The 2027 election moves from January to September 1–30, 2026 (Resolução CGSN 186/2026), with withdrawal possible until the last day of November 2026.