BRAZIL Trends and Developments Contributed by: João André Buttini de Moraes, Sergio Villanova Vasconcelos, Amanda Nadal Gazzaniga and Guilherme Villas Bôas, ButtiniMoraes Advogados
preparing operational processes, testing systems and avoiding contingencies. Throughout the year, the Federal Revenue Service and state agencies are issuing recurring technical notes and circulars. Companies must quickly adapt their systems, set new tax codes, train teams, and review product and goods cataloguing. Another point of emphasis is the need for early prep - aration for elaboration of IBS and CBS regulations, scheduled for 2026. Additionally, companies of all sizes, especially those with interstate operations and multiple classification of economic activities (CNAEs), should invest in tax automation, data intelligence, and auditing. Real-time information transmission and automatic cross-checks by tax authorities tend to increase rigor in identifying inconsistencies, making tax risk management a true competitive advantage. Given this, innovative companies may gain an edge by integrating compliance processes, tax artificial intel - ligence and automation – reducing costs and expand - ing tax governance. Monitoring decrees, normative instructions and administrative rulings is essential to ensure agile and assertive adaptation to the tax reform context. Elimination of PIS/COFINS and IS: structural changes and sector risks PIS/COFINS: closure and review of retroactive opportunities The story of the programme of social integration tax (PIS) and contribution for social security financing (COFINS) ends in 2026 – the culmination of decades of intense tax litigation, discussions on calculation bases and restrictions or extensions of credit rights. Landmark decisions – such as the exclusion of ICMS from the basis defined by the Supreme Court in 2017 – continue to generate debate. Companies from nearly all sectors should, in 2026, review their PIS/COFINS calculations and identify possible credits and opportunities for recovery to prevent the loss of rights after extinction. Particularly relevant are:
• evaluation of input concepts for credit, especially essential and relevant expenditures, in light of the Federal Revenue’s restrictive interpretation; • review of ongoing administrative and judicial procedures, seeking favourable decisions and/or reimbursement of credits; and • contingency planning and provisioning, mapping the accounting and financial transition to the future CBS regime. Thus, with the extinction of these contributions, pro - active measures become fundamental for those pur - suing savings and compliance. IS: fundamentals, affected sectors and controversies The selective tax (IS) is a tax that will be charged from 2027 and levied on goods and services considered harmful to health or the environment. The general rules governing this tax are set forth by Supplementary Law No 214/2025, which identifies the products that are subject to taxation. The applicable rates will be estab - lished by an ordinary law to be enacted in 2026 and may vary according to each product’s potential for collective harm and its environmental impact. In its first phase, taxation is expected on: • vehicles;
• vessels and aircraft; • tobacco products; • alcoholic beverages;
• sugary beverages; • mineral goods; and • sweepstakes and fantasy sports.
Its effectiveness depends on diligent rate calibration, transparency of product selection and a reasonable balance between revenue collection and regulatory policy. Impacted sectors, including beverage, tobacco, auto - motive, fuel and entertainment industries, need to map regulatory impacts, adjust cost structures and review contracts, including provisions for tax pass-through and protection mechanisms against rate changes. The tax may generate debate over the limit of regula - tory policy, equality and the rate calibration. Exposed
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