Tax equality in the Brazil tax reform: Impacts on foreign trade
Publication date: November 14, 2025
The Tax Reform in Brazil is approaching, bringing a scenario of transformation for companies and managers. Starting in 2026, with full implementation by 2033, it includes the transition from Programa de Integração Social (PIS)/COFINS to Contribution on Goods and Services (CBS), the creation of Imposto Seletivo (IS), and the replacement of ICMS/ISS by States, Federal District and Municipalities (IBS). These changes go beyond fiscal adjustments; they redesign the interaction between companies and the tax system, requiring careful adaptation of processes, technologies, and compliance strategies.
This article summarizes the key points on how the Brazilian Tax Reform, with a central focus on achieving tax equality for inputs intended for export, will unfold.
What is tax equality and why it matters
Concept and competitive relevance
Equality, in the fiscal context, means equal treatment for equivalent situations. In the Tax Reform, this translates into eliminating unjustified distinctions between domestic and imported inputs when used in the production of exported goods, reducing distortions, tax accumulation, and the Brazil cost, and aligning the country with international best practices.
Reform and equality for exports
CBS, IBS and IS: regulatory pillars
Complementary Law 214/2025 regulates the new system, establishing CBS (Federal), IBS (States, Federal District and Municipalities), and the Selective Tax (IS). The dual VAT design aims for neutrality and non-exportation of taxes, with specific rules for imports and exports and for special customs regimes.
Equal treatment for inputs
Under the Reform, inputs incorporated into products intended for export will receive unified tax treatment, regardless of whether they are purchased domestically or imported. This reduces tax accumulation, strengthens production chains, and brings greater predictability to industrial planning, including encouraging the use of regimes such as Drawback Suspension.
Flexibility in justified cases
There is also more flexibility for operators of regimes such as Drawback and RECOF. When justified unforeseen events prevent export within the deadline, the nationalization of inputs will no longer automatically imply interest and fines, provided the justification is consistent. These changes bring Brazil closer to OECD practices and expectations, reinforcing regulatory security and export competitiveness.
Implementation challenges for companies
Definitions, credits, and coordination with special regimes
Three fronts require attention:
- Precise definition of "input" versus "use/consumption good", as it impacts eligibility for equality;
- Efficient credit management (avoiding disallowances and speeding up reimbursements);
- Coordination with regimes such as the selective tax, reduced lists, and monophase, preserving neutrality. Additionally, adjustments in public procurement tend to correct distortions that favored imports in certain bids.
Immunity in exports of services and intangible goods
Neutrality and reduction of tax burden
LC 214/2025 provides for IBS and CBS immunity for exports of services and intangible goods consumed abroad and for services directly linked to the export of goods (e.g., agent commission, cargo insurance, clearance/storage, and international freight). This reduces cascading effects, preserves credits, and enhances the role of services in foreign sales.
Facilities for SMEs and logistics
Cargo consolidation outside customs areas
The Reform also opens space for consolidating cargo in private centers outside ports and airports, reducing storage/transport costs and expanding SMEs’ access to the global market — provided there is infrastructure integrated with the Federal Revenue and technical qualification to meet the new requirements.
Conclusion
The Tax Reform demands analysis, planning, and immediate action, opening opportunities through tax equality — neutrality and competitiveness for exports, by equalizing inputs, reducing accumulation, and providing customs predictability. To capture these gains, review finances and partnerships, update systems, train teams, and maintain active and proactive governance throughout the regulatory transition, with support from strategic partners. Additional details regarding the Tax Reform can be found here.
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