By Raphael Scheffer Lima
The Brazilian Federal Court of Accounts (TCU) has completed the calculation of the reference tax rate for the Contribution on Goods and Services (CBS), one of the pillars of Brazil’s tax reform.
After months of collaboration with the Brazilian Federal Revenue Service, the TCU established a reference rate of 11.3% for the CBS in 2027. This rate was calculated to ensure that revenue collection under the new system remains equivalent to that of the taxes being replaced.
In addition to the 11.3% rate, a 44.2% reduction factor was established for purchases made by direct public administration bodies, autonomous government agencies, and public foundations, ensuring that taxation on these acquisitions remains aligned with current levels.
It is important to emphasize that the 11.3% rate is a reference parameter and does not necessarily represent the final rate to be applied. The Federal Senate has the final authority and must establish the official rate through a resolution by December 15, 2026. The Federal Government also retains the prerogative to establish rates different from the reference rate through specific legislation, if necessary.
From now on, companies should assess their operations even more carefully to project the impacts of this rate in the coming year.
Negotiating contracts based on the net value of goods and services becomes essential to maintaining business operations.
This is because the 11.3% rate represents an increase in the tax burden, both nominal and effective, for a significant portion of transactions carried out in Brazil.
The estimated impact of this rate can be illustrated as follows:
| Company Tax Regime | Maintaining the Net Transaction Value* | Maintaining the Gross Transaction Value* |
|---|---|---|
| Actual Profit Regime (Lucro Real) (PIS/COFINS = 9.25%) | Approximate 1% increase in gross value | Approximate 1% reduction in net value |
| Presumed Profit Regime (Lucro Presumido) (PIS/COFINS = 3.65%) | Approximate 7% increase in gross value | Approximate 6% reduction in net value |
\* These impacts are estimates and may vary depending on other taxes levied on the transaction (IPI, ICMS, and ISS).
Tax reform is a strategic issue for all companies and has gained an additional layer of relevance, considering that the 11.3% rate has the potential to significantly affect both profit margins and business competitiveness.
What Should Companies Do Going Forward?
Certain practices should now receive greater attention:
1. Negotiate contracts based on net values. Negotiating based on net values is the only way to protect companies against unexpected changes related to the rates of the new taxes (CBS and IBS).
2. Assess the supplier chain. Companies should evaluate the impact on their suppliers, purchases, and overall supply chain. The tax rate will affect the buyer’s cash flow, but its effect on pricing lies in the net amount charged by the supplier. Poorly conducted negotiations may result in significant long-term costs.
3. Assess cash flow impacts. How will the new rate affect cash outflows related to purchases and services acquired? How should payment terms be renegotiated to avoid losing value throughout the supply chain? How will collection periods affect the working capital required to meet CBS obligations?
4. Assess transactions that are currently ineligible for tax credits. To what extent can the company reduce costs and recover tax credits on transactions that are not currently eligible for credit recovery?
5. Assess the impacts of the transition. Companies should verify whether they will be able to continue utilizing certain PIS/COFINS tax credits when calculating CBS liabilities (opening inventory, accumulated credit balances, fixed assets, etc.), thereby easing cash flow pressures at the beginning of 2027.
The measures outlined above are not exhaustive but may help companies navigate the changes arising from Brazil’s Tax Reform.
The team at Marins Bertoldi Advogados is closely monitoring developments related to this matter and remains available to address any questions and assist companies according to their specific circumstances.
