Brazilian Companies Begin Adapting Tax Invoices for Tax Reform

Companies in Brazil must begin issuing tax invoices with information regarding the country's tax reform starting Monday, August 3. This requirement applies to companies under the presumed profit and real profit regimes, generally those with annual revenues exceeding 4.8 million reais. Small businesses under the Simples Nacional regime are not affected at this time and will not be required to adapt their documents until January 1, 2027. The new requirements involve adding fields for two new taxes: the Contribution on Goods and Services (CBS), a federal tax replacing PIS/Pasep and Cofins, and the Tax on Goods and Services (IBS), a shared state and municipal tax replacing ICMS and ISS. Both are part of a new Value Added Tax (IVA) model intended to simplify consumption taxes. Currently, these new taxes are not being collected, but invoices must report a combined theoretical rate of 1 percent. The Federal Revenue Service stated that invoices missing these fields will not be rejected during this initial phase to ensure companies can continue billing while they adapt. Ten types of documents must be updated starting Monday, including electronic invoices for goods, consumer invoices, and transport documents. The deadline for most service invoices is October 1. To assist with the transition, the Federal Revenue and the IBS Management Committee announced a compliance program to be created within 30 days to help companies avoid fines for reporting errors.