Brazil – Adopted VAT Regulations to Support Tax Reform

The Federal Government of Brazil published on April 30, 2026, regulations that provide in more detail the directions for implementation of the most extensive indirect tax reform that the country has ever seen. The regulations for the Contribution on Goods and Services(CBS), and the Management Committee for the Tax on Goods and Services were published on the same day as the Regulations for the Tax on Goods and Services(IBS). 

The National Congress adopted both regulations.  The common text details the practical application of the new model, based on two types of consumption taxes, which are going to drastically change the currently fragmented consumption tax system. 

The reform creates a dual model, based on the CBS(federal contribution), and IBS(state and municipal tax), with a harmonized approach throughout the country. The adopted regulations, with harmonized texts, are a clear mirror of the new approach, which reflects simplicity, uniformity, and a unilateral approach.

Taxable persons and accredited tax professionals may submit suggestions for improving the regulation until May 31, 2026, via Receita Atende, which is available from May 4, 2026. 

Split Payment Mechanism

The Ministry of Finance elaborated on the introduction of the new tax collection mechanism, which will permit automatic collection of taxes, that will function through instant withholding of taxes at the point of purchase. 

The split payment model is going to be implemented gradually. Initially, the split payment model will be available for certain payment methods(such as bank slips and bank transfers), and later on for debit and credit cards. Automatic withholding will not be possible for customer-to-customer transfers(natural persons). 

Split payment operability 

The tax will be automatically deducted from the total at the point of purchase. The automated solution will deduct the taxes( following the defined patterns), and the tax will be automatically transferred to the tax authority, while the net value will be transferred to the vendor. 

The deduction will be processed at the moment when the payment is processed in the payment system of the financial institution.