Tax Reform
CBS & IBS Explained
Two taxes replacing five. How they work on imports, how they differ from the old system, and why the change matters for your landed cost.
CBS
Contribuição sobre Bens e Serviços
- Level: Federal
- Replaces: PIS + COFINS + IPI
- Rate: ~8.8% (reference rate)
- Collected by: Receita Federal
- On imports: charged at customs clearance
- Start: Full rate from January 2027
IBS
Imposto sobre Bens e Serviços
- Level: State + Municipal
- Replaces: ICMS + ISS
- Rate: ~17.7% (reference rate)
- Collected by: Comitê Gestor do IBS
- On imports: charged at customs clearance
- Start: Gradual 2029–2033
How CBS/IBS differ from the old system
| Feature | Old system (PIS/COFINS/ICMS) | New system (CBS/IBS) |
|---|---|---|
| Number of taxes | 5 (PIS, COFINS, IPI, ICMS, ISS) | 2 (CBS, IBS) + IS for some products |
| Cascading | Partial — PIS/COFINS calculated on ICMS base | Non-cascading — each calculated independently |
| Creditability | Limited — many restrictions on PIS/COFINS credits | Full — all CBS/IBS paid is creditable |
| State tax principle | Origin-based — importing state collects ICMS | Destination-based — consuming state collects IBS |
| Rate variation by state | 17–22% ICMS depending on UF + incentive programs | Uniform rate — no state-level variation for imports |
| Calculation base | Different for each tax, "gross-up" method for ICMS | Same base for CBS and IBS — "tax-exclusive" pricing |
| Filing complexity | Multiple declarations (EFD-Contribuições, EFD-ICMS, DCTF) | Unified declarations (EFD-CBS, EFD-IBS) |
CBS/IBS on imports — how it works
When importing goods into Brazil under the new system, CBS and IBS are calculated and paid at the same point as the current PIS/COFINS — during customs clearance via Siscomex:
Customs value determination
CIF value (same as today) → used as the starting point for all tax calculations.
Import Duty (II) calculated
II = CIF × TEC rate. This is unchanged by the reform.
CBS calculated
CBS = (CIF + II + IS if applicable) × CBS rate. Replaces the old PIS-Importação + COFINS-Importação calculation.
IBS calculated
IBS = (CIF + II + IS if applicable) × IBS rate. Replaces ICMS-Importação. No more "gross-up" (ICMS was calculated on a tax-inclusive base — IBS uses tax-exclusive).
Payment at clearance
All taxes (II + CBS + IBS + IS if applicable + AFRMM) paid via DARF before release of goods — same process, fewer tax lines.
The "gross-up" dies
Today, ICMS is calculated on a tax-inclusive base (the "gross-up" or "cálculo por dentro"). This means the effective ICMS rate is higher than the nominal rate — an 18% ICMS is effectively ~22% of the tax-exclusive price. IBS eliminates this: it's calculated on the tax-exclusive base, making the rate transparent and the math simpler.
Creditability — the biggest win
Under the current system, PIS/COFINS credits on imports have numerous restrictions. Some inputs aren't creditable, and the credit calculation is complex. CBS/IBS changes this:
- Full immediate credit — CBS and IBS paid on imports generate immediate, full credits against CBS/IBS on domestic sales.
- No restrictions by input type — unlike PIS/COFINS, where credits depended on whether the input was "for resale" or "for production," CBS/IBS credits are universal.
- Refund mechanism — if you accumulate more CBS/IBS credits than debits (e.g., you export more than you sell domestically), you can request a refund within 60 days.
- Split payment model — CBS/IBS uses electronic invoicing (NF-e) with automatic credit/debit matching, reducing fraud and simplifying audits.
Destination principle — end of tax tourism
Today, ICMS is collected by the state where the import occurs (origin principle). This created "tax tourism" — importers routing goods through states with ICMS incentives even when it's logistically inefficient:
Today (origin-based ICMS)
Import through SC (17% ICMS + TTD credit) even though the goods go to SP (18% ICMS). Save ~4% on ICMS but add truck time and handling costs.
After reform (destination-based IBS)
Import through whichever port is most efficient. IBS is collected based on where the goods are consumed (SP), regardless of where they entered Brazil.
This means port choice after 2033 will be driven by: transit time, port congestion, warehouse availability, and logistics costs — not tax arbitrage.
Reduced rates and exemptions
CBS/IBS have reduced rates (60% of the reference rate) for specific categories:
- Health services and devices — medical equipment and pharmaceuticals get reduced CBS/IBS
- Education — educational materials and services
- Basic food basket — defined list of staple foods gets 0% CBS/IBS
- Public transport — reduced rate applies
- Agricultural inputs — fertilizers, seeds, and agricultural machinery
- Zona Franca de Manaus — maintains full exemption until 2073
The "reference rate" may change
The ~26.5% combined rate (CBS ~8.8% + IBS ~17.7%) is calibrated to maintain current revenue. If the base broadens or tax evasion decreases (expected with electronic invoicing), the rate could be adjusted downward. Conversely, if too many exemptions are carved out, the rate may increase. Monitor the annual rate review by the Comitê Gestor.
What importers should understand
- Same collection point, different math — CBS/IBS are still collected at customs clearance. The process is similar but the calculation is simpler (no gross-up, same base for both taxes).
- Better cash flow — full creditability and faster refunds mean less trapped tax capital. Today, PIS/COFINS credits can take months to offset; CBS/IBS aims for 60-day refunds.
- ERP system updates needed — your Brazilian importer's or subsidiary's systems need to handle CBS/IBS. Most major ERP vendors (SAP, TOTVS, Oracle) have Brazil-specific modules being updated for 2027.
- Contracts need updating — if your agreements reference "PIS/COFINS" or "ICMS" rates, they need amendment with transition language covering 2026–2033.