Brazil Issues First CBS and IBS VAT Regulations

On April 30, 2026, Brazil released its first comprehensive regulations for the country’s new dual VAT system, providing detailed operational rules for both the federal Contribution on Goods and Services (CBS) and the state and municipal Tax on Goods and Services (IBS). The issuance of regulations represents a major step in implementing Brazil’s long-awaited reform of its complex indirect tax regime.

Scope of the Regulations

The published regulations span more than 1,200 articles and provide extensive practical guidance on how the new VAT system works. More specifically, the regulations define taxable transactions, explain how the tax base should be calculated, establish rules for input VAT credits, and introduce requirements for e-invoicing and digital documentation. 

Furthermore, the regulations also cover procedures for pre-filled VAT returns, registration obligations for non-resident businesses, and the operation of the split-payment collection mechanism. Also, the provisions underline that, starting in August 2026, those who fail to include CBS and IBS information in e-invoices may face penalties equal to 1% of the transaction value. 

Simultaneously, the authorities have opened a public consultation period until May 31, 2026, to gather technical feedback from taxable persons and industry participants on the evolving regulatory framework. Notably, the full implementation of the CBS and IBS system still depends on additional rules and coordinated guidance, including joint acts to be issued by Brazil’s Federal Revenue Service and the IBS steering committee.

Conclusion

Essentially, the release of regulations marks the beginning of the enforcement phase of Brazil’s VAT reform from an operational perspective. Moreover, it represents an important milestone rather than the final stage of the reform process. While some uncertainties remain, including the final CBS rate, businesses now have sufficient legislative and regulatory guidance to begin preparing for the reform in practical terms. Nonetheless, further monitoring for new secondary legislation, administrative guidance, and regulatory developments is required.

Source: Deloitte