Brazil Publishes Technical Rules and Sets August Pilot for Its New Dual VAT System

Overview

• On July 9 ministers published technical manuals and said the federal ministry invested R$2 billion to build a ‘split payment’ platform that will separate and route tax amounts at the point of sale.
• A formal pilot starts August 3 when companies in the regular regime will issue NF-e with a 1% test rate (0.1% IBS and 0.9% CBS) to validate new invoice fields and payment flows.
• The reform replaces PIS/Cofins, ICMS and ISS with a dual VAT — CBS (federal) and IBS (shared) — with CBS beginning in 2027 and full transition to the IBS planned through 2033.
• Key unresolved items for the next year are the TCU’s validation of revenue calibration to keep the system revenue‑neutral and Congress’s decision on the Imposto Seletivo rate, which will affect 2028 policy.
• Businesses face near‑term risks: experts say medium firms must update ERPs, map credit chains, revise contracts and integrate with banks and PSPs this year or risk billing rejections or cash‑flow disruption in 2027.