Will Brazil’s Tax Reform Make Taxation Simpler?

Brazil’s Tax Reform aims to simplify and modernize the system by unifying four taxes into a dual VAT (CBS and IBS) and introducing specific taxes on harmful products, reducing red tape and promoting economic growth.
In the short and medium term, companies face implementation challenges, including managing old and new systems (2026–2032), undefined tax rates, and necessary updates to accounting and operational systems, increasing compliance costs temporarily.
Dual VAT unification replaces multiple federal, state, and municipal taxes (PIS, COFINS, ICMS, ISS) with standardized calculation bases and credit rules, minimizing administrative burden, conflicting interpretations, and tax disputes for businesses across regions.
Reform enhances predictability and clarity of tax obligations, reduces litigation, and centralizes revenue collection through the Steering Committee, supporting consistent enforcement, split payments, and long-term simplification for both companies and tax authorities.

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