Brazil's Tax Reform Goes Live: CBS, IBS, and What 2026 Looks Like

Brazil has run one of the most complex consumption tax systems in the world for decades — a layered patchwork of federal PIS/COFINS, state-level ICMS, and municipal ISS, each with its own rules, rates, and disputes. That era is ending. Constitutional Amendment 132/2023, regulated by Complementary Law 214/2025, replaces these with a dual VAT: CBS (federal Contribution on Goods and Services) and IBS (Tax on Goods and Services, shared between states and municipalities).

2026 is the first transition year. Here is what is happening, what changes for invoicing, and what businesses outside Brazil that sell into the country should be tracking.

What CBS and IBS replace

• CBS (Contribuição sobre Bens e Serviços) — federal, replaces PIS and COFINS.
• IBS (Imposto sobre Bens e Serviços) — replaces state ICMS and municipal ISS, jointly administered by states and municipalities through the Comitê Gestor do IBS.
• IS (Imposto Seletivo) — a new federal selective tax on goods deemed harmful to health or environment (tobacco, alcohol, sugary drinks, certain vehicles).

The phased timeline through 2033

• 2026 — testing year. CBS at 0.9% and IBS at 0.1% applied alongside existing taxes. Businesses must issue documents reflecting the new taxes but the amounts can be offset against PIS/COFINS, making the year cost-neutral for compliant taxpayers.
• 2027 — CBS goes to its full rate; PIS and COFINS are extinguished. The IS selective tax begins.
• 2029–2032 — IBS gradually replaces ICMS and ISS at increasing percentages each year (10% per year roughly), with ICMS/ISS proportionally reduced.
• 2033 — full transition complete. ICMS and ISS are extinguished. CBS + IBS combined target rate is in the region of 26.5% (final rate set by future law).

What changes for NF-e

Brazil's electronic invoicing system — NF-e (Nota Fiscal Eletrônica), NFC-e (consumer-facing), NFS-e (services), CT-e (transport) — is one of the longest-running mandatory e-invoicing systems in the world, live nationwide since 2008. The reform does not abolish NF-e; it extends it.

From 2026, NF-e schemas require new fields for CBS and IBS calculation. SEFAZ and the Comitê Gestor publish updated XML schemas; ERP and invoicing software must be updated to populate the new fields. Brazil's Receita Federal published technical notes throughout 2025 staging the schema changes.

What this means for international suppliers

If your business sells digital services or goods into Brazil, the reform affects you in two ways:

• Imports of goods are subject to CBS and IBS at the same rates as domestic transactions, with credits flowing through to Brazilian buyers — unifying treatment that previously differed across federal and state borders.
• Imports of digital services and intangible goods become subject to CBS/IBS where the consumer is in Brazil, following the OECD VAT/GST guidelines for digital trade. Non-resident suppliers above the registration threshold must register and remit.

Bottom line

2026 is the soft-launch year — low rates, full visibility. The big rate change comes in 2027 with the disappearance of PIS/COFINS. For non-Brazilian businesses, the practical action this year is to confirm that any invoicing or billing system you use for Brazilian customers can handle the new CBS/IBS fields in NF-e and that any digital-services registration is in order.

Sources

• Constitutional Amendment 132/2023, Federal Senate of Brazil.
• Complementary Law 214/2025 — regulating CBS, IBS, and IS.
• Receita Federal do Brasil — technical notes on NF-e schema updates 2025–2026.
• Comitê Gestor do IBS — joint state/municipal IBS administration framework.