BRAZIL Trends and Developments Contributed by: João André Buttini de Moraes, Sergio Villanova Vasconcelos, Amanda Nadal Gazzaniga and Guilherme Villas Bôas, ButtiniMoraes Advogados
Tax Reform on Consumption: Implications for Companies in 2026 The Brazilian tax landscape will undergo a historic shift in 2026: the beginning of the implementation of consumption tax reform. The transition period will extend until 2033, when the new regime will be fully established. Companies of all sizes will need to swiftly adapt to new legislative and administrative require - ments, revising business models, contractual strate - gies and operations. This article analyses the main points, trends and opportunities at this pivotal moment, with an empha - sis on strategic value creation during this transforma - tive period for the Brazilian tax system. In depth: tax reform as a driver of business model transformation The proposed tax reform is not merely an adjustment in collection mechanisms; it represents a structural repositioning for companies regarding their opera - tions, pricing, processes and strategic planning. With the adoption of full non-cumulative taxation as a rule, and the shift from origin-based to destination- based taxation, the impact of the reform on produc - tion, pricing and logistics chains will be profound. The traditional Brazilian model heavily relied on state incentives, special regimes and structures optimised for the lowest tax burden at the origin of operations. The new paradigm guides companies to rethink the following. • Location of operations: Destination-based taxa - tion will require companies to resize their logistics structures, distribution centres and even manufac - turing plants to be closer to consumer markets and minimise transportation and tax costs. Regions that were previously advantageous due to incentive policies might lose competitiveness. • Logistic costs and value chain: The new system and the limitation of fiscal benefits require changes to logistic chains, freight contracts, storage mod - els, inventory management and supplier relation - ships. Vertically integrated companies and those operating multiple chains will need to leverage technology, data analysis and predictive models to
simulate scenarios and identify vulnerabilities and opportunities. • Reduction and removal of fiscal benefits: The reform foresees the phased elimination of tax on the circulation of goods and services (Imposto sobre Circulação de Mercadorias e Serviços – ICMS) and tax on services ( Imposto sobre Serviços – ISS) benefits, to be reduced by 10% per year from 2029 to 2032. Companies dependent on special tax regimes must begin mapping contin - gencies and alternative contractual and operational solutions. The immediate risks are increased costs, reduction in margins and diminished competitive - ness in regional markets. • Review of commercial contracts and tax clauses: With the net price rule (taxation calculated over the price value and not embedded in contracts), aligning commercial conditions between suppli - ers and clients becomes challenging. Transfer and tax adjustment clauses must be revised to avoid unnecessary exposure or litigation regarding inter - pretation under the new regime. • Strategic comparison and projections: 2026 is the year for analysis. Companies should carry out simulations between the current model and future scenarios, projecting costs, margin impacts, corporate structuring, risk matrix evaluations and, most importantly, long-term tax planning. Business leadership must integrate tax, legal, com - mercial, technology and operational perspectives. The post-reform environment heightens the importance of governance, tax compliance and data intelligence, transforming fiscal knowledge into strategic assets. New ancillary obligations: procedural, technological and compliance challenges The tax reform goes beyond substantive changes, introducing a robust set of ancillary obligations that require reconfiguration of tax, accounting and IT departments. At the outset of 2026, companies are already issuing new models of invoices, comprising the contribution on goods and services (CBS) at 0.9% and the tax on goods and services (IBS) at 0.1%. Although collection is not immediate, formal compliance is essential for
60 CHAMBERS.COM
Powered by FlippingBook