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Brazil's consumption tax reform: IBS, CBS and IS timeline

Last verified: 2026-10-25

Constitutional Amendment 132/2023 replaces PIS, COFINS, IPI, ICMS and ISS with a dual VAT: the federal CBS and the subnational IBS, plus a federal selective tax (IS). 2026 is a test year at 0.9% CBS and 0.1% IBS, offsettable and waived for compliant taxpayers. The CBS replaces PIS and COFINS in 2027, ICMS and ISS fall by a tenth a year from 2029, and the old taxes are gone in 2033.

The rule

1. In 2026 the IBS is charged at a 0.1% state rate and the CBS at 0.9%; amounts paid offset PIS and COFINS, or any other federal tax, or are refunded within 60 days.Constitutional Amendment 132/2023, art. 125 ADCT, 2023-12-20 official text

2. For 2026 events, payment of IBS and CBS is waived for taxpayers who comply with the ancillary obligations; they keep paying PIS and COFINS in full.Complementary Law 214/2025, art. 348, paras. 1 and 2, 2025-01-16 official text

3. From 2027 the CBS and the selective tax are charged, PIS and COFINS are extinguished, and IPI rates are reduced to zero except for products with incentivized industrialization in the Manaus Free Trade Zone.Constitutional Amendment 132/2023, art. 126 ADCT, 2023-12-20 official text

4. In 2027 and 2028 the IBS is charged at 0.05% state and 0.05% municipal, and the CBS rate is reduced by 0.1 point.Constitutional Amendment 132/2023, art. 127 ADCT, 2023-12-20 official text

5. From 2029 to 2032 ICMS and ISS rates are set at 9/10, 8/10, 7/10 and 6/10 of their legal rates.Constitutional Amendment 132/2023, art. 128 ADCT, 2023-12-20 official text

6. ICMS and ISS are extinguished from 2033.Constitutional Amendment 132/2023, art. 129 ADCT, 2023-12-20 official text

7. If the estimated combined IBS and CBS reference rates exceed 26.5%, the Executive must send Congress a bill to bring them to 26.5% or less.Complementary Law 214/2025, art. 475, para. 11, 2025-01-16 official text

8. Complementary Law 227/2026 created the IBS Management Committee (CGIBS) and the IBS administrative procedure, and amended LC 214/2025.Complementary Law 227/2026, ementa and art. 182, 2026-01-13 official text

Worked example

A company invoices BRL 1,000,000 of taxable sales in 2026 (about USD 198,503). The invoice shows CBS at 0.9% (BRL 9,000) and IBS at 0.1% (BRL 1,000). If it meets the ancillary obligations, payment of those BRL 10,000 is waived and PIS and COFINS are paid as usual. If it pays them, the BRL 10,000 offsets PIS and COFINS. USD at the BCB PTAX selling rate of 23 October 2026, BRL 5.0377 per USD.

Step by step

2026: adapt ERP and electronic invoices to report CBS and IBS and keep compliance clean to secure the payment waiver.
2026 to 2027: reprice contracts; EC 132 calls for law to provide adjustment instruments for contracts signed before the new taxes, including concessions.
2027: CBS replaces PIS and COFINS; IPI zeroed outside the Manaus regime; selective tax starts.
2029 to 2032: plan the unwinding of ICMS incentives, which shrink with the rate cuts.
2033: only IBS, CBS and IS remain on consumption.

Common traps

Treating 2026 as irrelevant: the waiver depends on meeting ancillary obligations.
Valuing ICMS incentives beyond 2028 at full value.
Assuming the final rates are known: reference rates are set by Senate resolution and reviewed every five years.

Sources

Related: Brazil country profile · live dashboard · central bank and release calendar · our posts on X · where Argentina is involved, see The Argentine Thread guide

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