Brazil Finance Minister Dario Durigan flags political risk in tax reform

Finance Minister Dario Durigan said the greatest risk to Brazil’s tax reform is the opposition’s desire to revisit the political agreement that secured its passage. He warned that attempting to repeal the deal would be a mistake, calling the political dimension the "first risk." Durigan also highlighted operational challenges, including the introduction of a new selective tax that will replace the IPI next year, and the complex transition from the state‑level ICMS to a shared Imposto sobre Bens e Serviços (IBS). He noted a strong "fiscal war" among states and the need for a simplified, technologically robust system to manage the shift.

The broader reform will replace five existing taxes—PIS, Cofins, IPI, ICMS and ISS—with two new levies: a federal Contribuição sobre Bens e Serviços (CBS) and the IBS shared by states and municipalities. Implementation will be phased from 2026 through 2033, affecting revenue distribution, corporate tax compliance, and potentially the tax burden on consumers, with sector‑specific impacts still uncertain.