How vat / sales tax works in Brazil
Brazil's consumption-tax reform replaces five cascading levies with a dual VAT: federal CBS and state-municipal IBS, destination-based, non-cumulative, with broad input credits.
2026 runs test collections of 0.9% CBS and 0.1% IBS alongside existing taxes, rates ramp through the transition, and the old PIS, Cofins, IPI, ICMS, and ISS disappear by 2033.
Simples Nacional keeps a simplified track for small business, special regimes cover finance and health, and the reform constitutional amendment plus complementary laws set the calendar.
Tax rates at a glance
- Consumption tax
- IBS/CBS from 2026
- 2026 test collection
- 0.9% + 0.1%
- Current PIS and Cofins
- 1.65% / 7.6%
- State ICMS
- 17% - 20%
- Municipal ISS
- 2% - 5%
- Simples Nacional
- Single slip
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
E-commerce sellersManufacturersSaaS foundersExpatsCross-border traders
Watch out for
- Quoting a single Brazil VAT rate in 2026 is wrong: test rates, current taxes, and future reference rates coexist, so contracts need transition clauses rather than fixed percentages.
- Credit accumulation under the old cascade does not map one-to-one into IBS and CBS, which makes balance-sheet reviews part of every 2026 tax plan.
- State ICMS incentives and fiscal-war benefits phase under grandfathering with conditions, not automatic continuation.
- Marketplace, import, and digital-service collection points move during transition, so platform sellers should confirm who remits in each year.
Frequently asked questions
Does Brazil have VAT in 2026?
In transition. Test IBS and CBS collections run at 0.9% plus 0.1% in 2026 while PIS, Cofins, IPI, ICMS, and ISS still apply, with full dual-VAT rates phasing in through 2033.
What are IBS and CBS?
The dual consumption VAT replacing five taxes: federal CBS and state-municipal IBS, destination-based with broad credits. Complementary legislation sets rates, regimes, and the phase-in calendar.
What happens to Simples Nacional?
Small businesses keep a simplified unified track with transition options into the new system. Eligibility, brackets, and credit treatment need annual review during the phase-in.