CBS and IBS in Tax Reform: practical impacts for companies in 2025
Por Guilherme PagottoCBS and IBS replace five current taxes with a simplified, non-cumulative model. Understand the mechanics, practical impacts, and what to expect during the transition.
What Are CBS and IBS?
CBS (Contribution on Goods and Services) is the federal tax replacing PIS, Cofins, and IPI. IBS (Tax on Goods and Services) is the state/municipal tax replacing ICMS and ISS. Combined, they form the dual VAT (Value Added Tax) model.
The Non-Cumulative Model
Non-cumulative taxation means taxes are charged only on the value added at each stage. Example: Manufacturer buys raw materials for BRL 100 and pays BRL 27 in taxes. Sells finished product for BRL 200 and pays BRL 54 in taxes. Credits the BRL 27 paid on inputs. Net tax due: BRL 54 - BRL 27 = BRL 27.
Transition Timeline
CBS and IBS begin at 1% to test systems. Companies must issue dual invoices (old and new formats) and adapt processes.
Old taxes (PIS, Cofins, ICMS, ISS, IPI) are phased out gradually while CBS and IBS rates increase proportionally each year.
Only CBS and IBS remain. Old taxes are fully replaced.
Standard Rate and Exceptions
Standard combined rate (CBS + IBS): Estimated at 26.5% (subject to government adjustment). Reduced rates and exemptions apply to: National Basic Basket (zero rate), healthcare and education (50% reduction), public transport (40% reduction), selected culture and sports services (40-60% reduction).
Destination Principle
IBS is collected where the product or service is consumed (destination), not where it is produced (origin). For interstate commerce: Seller does not collect IBS (or collects and transfers to destination state). Buyer's state collects IBS. For export: CBS and IBS are zero-rated (exports are exempt). Importers pay full CBS and IBS on entry.
Practical Impacts by Sector
Commerce (Retail and Wholesale)
- Higher effective rate: Current PIS/Cofins (3.65%) + ICMS (varies 7-18%) vs. CBS + IBS (26.5%). For many, net burden increases
- Credit management: Need to properly track input credits to reduce effective rate
- Interstate sales: Must understand destination principle for IBS
Services
- Increase for most services: Current PIS/Cofins (3.65%) + ISS (2-5%) vs. CBS + IBS (26.5%)
- Sectors with reduced rates (healthcare, education): Benefit significantly
- Complex services (consulting, technology): Must review pricing to maintain margins
Industry
- Benefits from full non-cumulative model: Can credit all inputs including services
- Loss of IPI credits: IPI is currently creditable; with replacement by CBS, credit dynamics change
- Reorganization of production chains: Vertically integrated operations may need reassessment
What Companies Should Do Now?
Calculate exactly how much you pay today in PIS, Cofins, ICMS, ISS, and IPI. This is your baseline for comparison.
Apply the 26.5% rate (or specific reduced rate if applicable) to your revenue. Simulate credits from inputs and calculate net effective burden.
Do you track all input invoices correctly? Can you identify what is creditable? Your systems must be ready for rigorous credit control.
If your tax burden increases, how will you adjust? Pass on to customers? Absorb and reduce margins? Optimize costs?
Conclusion
CBS and IBS represent the biggest change in Brazilian taxation in decades. For some businesses, the impact is positive (full credit, reduced rates). For others, burden increases significantly. What matters is acting early: map, simulate, prepare. Those who wait until 2026 will face crisis. Those who prepare now will adapt smoothly.
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Guilherme Pagotto
Diretor Tributário
Contador, especialista em tributação empresarial e planejamento tributário estratégico. Mais de 15 anos de experiência em reforma tributária e estruturas societárias.
Consultoria Estratégica Personalizada
Análise completa do seu negócio com soluções sob medida para seus desafios específicos.