What is the IVA Dual System?

The IVA Dual system introduces two separate value-added taxes that will replace Brazil's complex web of federal, state, and municipal taxes. This historic reform aims to simplify Brazil's notoriously complicated tax system and improve the business environment.

CBS - Contribution on Goods and Services

The CBS (Contribuição sobre Bens e Serviços) is a federal tax that will replace PIS, COFINS, and IPI. This federal component is expected to have a rate between 12-13% and will be administered by the Federal Revenue Service.

IBS - Tax on Goods and Services

The IBS (Imposto sobre Bens e Serviços) is a subnational tax that will replace ICMS and ISS. Managed by states and municipalities, it represents a significant shift in how regional taxes are collected and distributed.

Impact on U.S. Companies

For American companies operating in or exporting to Brazil, this reform brings both opportunities and challenges:

• Simplified Compliance: Fewer taxes means less administrative burden
• Transparent Rates: Clearer tax structure makes planning easier
• Transition Period: Implementation will occur gradually through 2033
• Supply Chain Impact: Tax credits and calculations will change

Timeline and Implementation

The reform will be implemented in phases:

• 2026: Testing phase begins
• 2027: CBS becomes effective at 1%
• 2029-2032: Gradual transition period
• 2033: Full implementation

How BTACC Can Help

Our team of 120+ Brazilian tax specialists is actively monitoring this reform and helping U.S. companies prepare for the changes. We offer:

• Impact assessments for your specific business
• Transition planning and compliance strategies
• Ongoing monitoring of regulatory changes
• Training for your finance and operations teams