Tax Reform: Six Months On, What Has Already Changed in Practice

Since January 2026, Brazil has been in the test phase of the tax reform, with real collection (even if offset) of the new taxes that will replace ICMS, ISS, IPI, PIS, and COFINS. Six months on, it is worth taking stock of what has already changed for companies and what still needs adjusting before full implementation in 2027.

What the test phase is, and what has already changed in practice

The reform replaces five taxes — ICMS, ISS, IPI, PIS, and COFINS — with two new ones: the CBS (Contribution on Goods and Services), a federal levy, and the IBS (Tax on Goods and Services), a state and municipal levy, inside a dual VAT model with credit offsets along the production chain. In 2026, the combined test rate is only 1%: 0.9% CBS and 0.1% IBS.

The important point is that this amount is actually paid, but offset against the PIS and COFINS the company was already remitting, so total cash outlay for the year does not rise. Even so, the tax authority has been clear: 2026 is a real operational rehearsal, with real money moving, not a simulation. In practice, that has already forced companies to update accounting and invoice systems for the new tax fields, to show CBS and IBS on fiscal documents with the correct classification, and to review NCM codes and tax situations to avoid rejected invoices.

What still needs adjusting before 2027

From 2027, split payment comes in: a mechanism that automatically separates, at the moment of payment, the tax slice owed to the government, right in the financial transaction. That changes companies’ cash-flow dynamics: today the tax is assessed and paid later, with some cash float between the sale and the tax payment; with split payment, that float disappears, because the amount is withheld automatically.

Anyone treating 2026 as a waiting year risks an operational shock in 2027. Accounting specialists have been repeating that the accountant stops being only a generator of tax slips and starts acting as a strategic adviser, helping anticipate the impact on working capital. For companies operating between Brazil and the United States, the most urgent adjustment is to review contracts with suppliers and clients that still lack pass-through or tax-adjustment clauses, and to simulate the effect of split payment on cash before it becomes mandatory.