Brazil’s Tax Reform introduces an important decision for companies under the Simples Nacional tax regime.
Starting in 2027, these companies will basically have two alternatives regarding CBS (Contribution on Goods and Services) and IBS (Tax on Goods and Services):
1. Keep CBS and IBS within Simples Nacional
Under this model, CBS and IBS remain within Simples Nacional and continue to be part of the unified tax payment system.
2. Pay CBS and IBS separately under the regular tax regime
The company remains under Simples Nacional for the other taxes while paying CBS and IBS separately under the regular tax regime.
This model has been referred to as the “hybrid Simples Nacional.”
Pay attention to the September 30, 2026 deadline
Companies wishing to use the second alternative for the first half of 2027 must make their election by September 30, 2026.
Companies under Simples Nacional should therefore begin analyzing this decision as soon as possible.
The decision should not be based solely on the company’s tax burden
One of the most important aspects of this decision is that companies should not limit their analysis to comparing how much tax they themselves would pay under each alternative.
They should also consider:
- who their main customers are;
- who their main suppliers are;
- how CBS and IBS tax credits will flow throughout the supply chain;
- the tax credits arising from the company’s purchases;
- the tax credits generated for its customers;
- potential impacts on pricing; and
- the effects on the company’s competitiveness.
A company that sells primarily to other businesses may face a completely different situation from a company that sells directly to end consumers.
The analysis should therefore go beyond the company’s tax burden considered in isolation.
Your suppliers’ decisions also matter
Another important step is to talk to your main suppliers.
Companies should seek to understand which model their suppliers intend to adopt in 2027:
Will they keep CBS and IBS within Simples Nacional?
Or:
Will they choose to pay CBS and IBS separately under the regular tax regime?
The same analysis should be conducted with the company’s main customers.
Brazil’s Tax Reform needs to be analyzed from a supply-chain perspective, because the decision made by one company may affect the companies that buy from it as well as those that sell to it.
Do not leave this analysis until the last minute
Tax Reform is not simply about calculating a new tax.
For companies under Simples Nacional, it will be necessary to understand how their businesses will operate within a new tax framework and how their decisions may affect customers, suppliers, tax credits, pricing and competitiveness.
Considering the September 30, 2026 deadline, companies should begin this assessment in advance, looking not only at their own numbers but also at the characteristics of their business and supply chain.
How ORGATEC can help
ORGATEC can assist your company in evaluating the potential impacts of Brazil’s Tax Reform and the alternatives involving Simples Nacional, CBS and IBS.
We specialize in accounting and tax services for Japanese companies in Brazil, combining knowledge of the Brazilian business environment with experience supporting the specific needs of Japanese companies operating in the country.
If your company is under Simples Nacional, now is the time to assess the potential impacts and prepare for the decisions that will need to be made for 2027.