Brazil Kicks Off Dual-IVA Transition With 1% Test Levy and New Invoicing Rules

Overview

• The CBS at 0.9% and the IBS at 0.1% are now recorded on real transactions and offset against current levies, keeping the 2026 tax burden unchanged.
• Legacy consumption taxes continue to operate in 2026, with the phaseout of PIS, Cofins, IPI, ICMS and ISS scheduled to start in 2027.
• New invoice fields for CBS and IBS are mandatory, requiring software updates and correct classifications or companies risk rejected notes, halted billing and future assessments.
• The tax authorities postponed automatic penalties for missing IBS/CBS data until the first day of the fourth month after final regulations are published.
• A split-payment system that diverts tax directly to government becomes mandatory in 2027, prompting 2026 preparations as industry leaders warn of legal uncertainty and regional risks during the transition.