Brazil's Consumption Tax Reform Faces Complex Implementation Challenges

Brazil's tax reform aimed at simplifying consumption taxes proposes to eliminate ICMS, ISS, IPI, PIS and COFINS, replacing them with a dual value‑added tax structure – the IBS and CBS – alongside a selective tax. The legislation also introduces a specific export contribution to offset potential state revenue losses.

Implementation will be gradual, with the new taxes coexisting with the old until 2033, creating double compliance costs for businesses. The reform expands the tax code to more than 650 constitutional provisions and adds over 14,000 regulatory items under Complementary Laws No. 214 and No. 227. Judicial challenges to the abolished taxes are expected to persist, and the promised simplification may only become apparent after full rollout.