Brazil has recently enacted tax reform through Complementary Law No. 214/2025, which mandates significant changes for businesses. Effective from January 2026, the new tax regime introduces the CBS and IBS, replacing existing taxes like PIS and Cofins.
A key change involves the regime for tax credits. Under the new rules, businesses can only claim tax credits if their suppliers have paid the CBS and IBS. To combat tax delinquency, a split payment system will be implemented, requiring payment processors to separate transaction values from tax amounts.
Businesses must ensure their fiscal software integrates with systems from the Federal Revenue Service and payment companies. Any discrepancies could lead to overpayment of taxes, although the law promises reimbursement within three working days.
With approximately 22 million active companies in Brazil, the new system presents challenges in processing millions of daily transactions. Many companies may struggle to invest in necessary software upgrades.
Additionally, the split payment system changes the way businesses record sales and purchases. Companies will need to adjust their financial strategies to avoid cash flow issues, as tax credits will now be recorded daily rather than monthly.
The new tax rules require immediate action from businesses to adapt to these significant changes. As the deadline approaches, companies must prepare for the implications of the new tax landscape.