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Lula Finalizes Brazil's Consumption-Tax Overhaul With Vetoes and Digital Platform Launch

Businesses begin a penalty-free testing period in 2026 ahead of the new consumption taxes.

Overview

  • The sanctioned law completes regulation of the reform that consolidates levies into a federal CBS and a state–municipal IBS under a value-added model.
  • A new CG-IBS will oversee IBS collection, auditing, and revenue distribution with representatives from the Union, states, and municipalities.
  • The Receita FederalSerpro platform went live with real-time monitoring, assisted calculations, and simulations, tested by 400+ companies and sized for about 200 million operations per day and 5 petabytes of data per year.
  • The implementation calendar sets CBS and the selective tax to start in January 2027, IBS to enter transition in 2029, and ICMS/ISS to be fully extinguished by 2033.
  • Lula vetoed a SAFs tax cut approved by Congress, keeping the total rate at 6% (4% plus 1% CBS and 1% IBS), and also blocked provisions on ITBI timing, monophase cashback changes, fixed subnational competencies, loyalty-point exclusions, sole Suframa authority, a new simulation concept, and an overly broad expansion of the basic basket.