- São Paulo will remove hundreds of products from the ICMS tax substitution regime starting January 1, 2026, eliminating upfront VAT collection for goods like food, beverages, medicines, auto parts, and construction materials
- Under the current system, one taxpayer early in the supply chain collects ICMS tax for the entire distribution chain, but the new regulation requires tax collection at each stage instead
- This change aligns with Brazil’s broader tax reform aimed at reducing or eliminating advance VAT collection by states
- Industries importing, manufacturing, or selling affected products must adapt their e-invoicing, tax collection, and reporting processes to comply with the new system
- The transition represents an evolving process with ongoing discussions about tax reform that may lead to further government adjustments
Source: kpmg.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
Latest Posts in "Brazil"
- Overview of NF-e and NFC-e: Legal Background, Technical Architecture, and Fiscal Document Standards
- Brazil’s New Tax Era: Software-Driven Fiscalization and Compliance Challenges for Retailers
- Brazil Unifies Five Taxes Into Dual VAT, Modernising System and Cutting Compliance Costs by 60%
- Brazil’s Tax Reform: New CBS/IBS Rules for Non-Resident Digital Suppliers from 2026
- Q&A Highlights: Key Fiscalization Questions from “Brazil Enters a New Era” Webinar
