Key facts
- Tax revenue chief Robinson Barreirinhas said the bill would let taxpayers pay the tax based on estimated liabilities.
- The bill would waive the requirement that tax credits be tied to actual payments, Barreirinhas said.
- Barreirinhas said the measure addresses concerns over the link between tax credits and payments and the split payment mechanism.
- Split payments, under which consumption taxes are remitted automatically at the time of a transaction, will be optional next year.
- Barreirinhas said the government was committed to maintaining the reform's current timeline despite industry calls for a testing year.
Brazil's government will send Congress a bill allowing taxpayers to postpone final payment of the federal portion of a new consumption tax set to take effect in January, tax revenue chief Robinson Barreirinhas said at a press conference in Brasilia on November 11, 2026.
Barreirinhas said the measure would allow taxpayers, if they choose, to defer payment of the federal Goods and Services Tax (CBS) next year until the month following the taxable transaction. If approved, the bill would let taxpayers pay the tax based on estimated liabilities, waiving the requirement that tax credits be tied to actual payments, he said.
Barreirinhas said the measure was designed to address concerns over the link between tax credits and payments, as well as the so-called split payment mechanism, under which consumption taxes are automatically remitted to the government at the time of a transaction rather than remitted later by companies. Split payments, which will be optional next year, became a flashpoint during the presidential race won last month by leftist President Luiz Inacio Lula da Silva. His runoff opponent, right-wing Senator Flavio Bolsonaro, had pledged to scrap the mechanism and review parts of the consumption tax overhaul.
Supporters argue split payments would improve tax compliance and curb evasion, while critics contend they would drain companies' working capital.
Passed in 2023 after decades of debate, Brazil's consumption tax reform replaces the federal PIS and Cofins levies with the CBS, while merging the state ICMS and municipal ISS taxes into a separate tax to be called IBS. The CBS is set to take effect next year at close to its full rate, following a testing phase, with the transition due to be completed in 2028. The IBS will also begin in 2027 but will be phased in more gradually, reaching full implementation only in 2033.
Amid calls from several industry associations for 2027 to serve only as a testing year, with full implementation postponed until 2028, Barreirinhas said the government was committed to maintaining the reform's current timeline.