Brazil tax reform drives IBS debates and ICMS credit scramble among transporters

Brazil's new tax reform, established by Constitutional Amendment No. 132/2023, introduced the Imposto sobre Bens e Serviços (IBS) to replace existing state and municipal taxes. On 2 July, Luis Felipe Vidal Arellano, vice‑president of the Comitê Gestor do IBS (CGIBS) and São Paulo's municipal finance secretary, addressed the Conselho Estadual de Defesa do Contribuinte (CODECON/SP). He highlighted the reform’s aims – ending cumulative consumption taxes, improving neutrality and reducing complexity – and warned that the transition will demand significant effort from both public authorities and the private sector. He stressed that “the success of the tax reform will depend not only on the quality of the laws … but also on the capacity of governments, tax administrations, accountants, lawyers and taxpayers to build trust and cooperation.”

Legal analysts argue that the law allowing the registration of IBS debts in active debt registries may be unconstitutional because it fragments credit collection across state and municipal prosecutors, contrary to the unified system envisioned by the reform. The complementary law 227/2026 assigns coordination of debt collection to the CGIBS but leaves execution to local prosecutors, creating operational chaos.

Meanwhile, transport companies are rushing to reassess ICMS credits that could be lost as the ICMS is gradually phased out between 2029 and 2033. Tributarists note that fuel, tires, parts and maintenance represent up to 90 % of transport costs, making credit recovery crucial. Uncertainty remains over how these credits will be treated under the IBS, prompting companies to prepare for administrative disputes and possible litigation.