Brazil Tax Reform: Why Companies Must Act Now

Why Is Brazil's Tax Reform a Competitive Issue Right Now?

Brazil has entered the testing phase of its landmark tax reform, with symbolic charges now being levied under the new CBS (Contribuição sobre Bens e Serviços) and IBS (Imposto sobre Bens e Serviços). Full implementation is scheduled for 2033, but experts warn that waiting is already costly.

"The financial impact and complexity will be significant. The change goes far beyond tax collection, and companies that have not started the process are already falling behind and risk losing competitiveness," said Fábio Villa, Commercial Director at Itaú BBA, responsible for middle market, corporate banking, multinationals and tech companies.

How Prepared Are Brazilian Companies?

A Serasa Experian survey revealed a worrying gap: 42% of small and medium-sized enterprises (SMEs) cannot assess the reform's impact on their business, and 40% cannot even identify what stage of preparation they are at.

Villa stresses that the transition period is precisely the time to map impacts, review processes and prepare IT systems — not a moment to wait and see.

Which Business Areas Are Most Affected?

Although rooted in tax policy, the new regime will ripple through virtually every department:

• Pricing: Products that are currently profitable may lose competitiveness under the new credit and tax-incidence dynamics.
• Working capital: The split-payment mechanism will change cash-flow timing significantly.
• Supply chain: Supplier selection will increasingly factor in their ability to generate consistent tax credits. Any failure in the chain can hurt liquidity.
• Technology and internal processes: Finance and tax functions that operate separately today must be integrated.

What Is the Split-Payment Mechanism?

Under the new system, suppliers will deliver tax credits alongside their products or services. This makes credit-chain quality a central input in price formation and a new criterion for evaluating commercial partners, according to Fernando Gonçalves, Head of Economic Research at Itaú Unibanco.

What Should Companies Do Next?

The seven-year dual-system transition — running the old and new regimes simultaneously — is the main operational challenge ahead. Companies are advised to start mapping now, update contract structures, and align commercial, financial and fiscal teams before the pressure intensifies closer to 2033.