Brazil’s Tax Reform Enters Hybrid Phase as Firms Race to Adapt

Overview

• Brazil has begun a multi‑year shift to a dual VAT‑style system, where new taxes on goods and services (CBS and IBS) run with PIS, Cofins, ICMS and ISS until 2033.
• A study from the industry ministry says the overhaul should reduce tax distortions and supply‑chain costs, lifting export competitiveness.
• Key rules remain unsettled, including the final combined rates and how credits and offsets will apply to imports and exports, which complicates pricing and planning.
• The phase‑out of ICMS import incentives through 2032 is already forcing companies to reassess warehouse locations, shipping routes and contract clauses.
• About 62% of firms have not begun mapping the impact, and experts urge automation, tighter cash controls and split‑payment readiness to avoid losing cash even as sales continue.