Brazil NBS E-Invoicing: Key Tax System Changes

It is no news that Brazil is undergoing a major tax reform, from replacing a complex indirect tax system with a more simplified so-called dual VAT system, to considering the introduction of a Digital Social Contribution on tech companies that use, sell, or transfer services with users’ data, and setting up its national e-invoicing system. As part of the progress towards achieving this goal, the Brazilian government updated its e-invoicing framework.

Key Changes to E-Invoicing Framework

Starting from January 1, 2025, the Brazilian Nomenclature of Services (NBS) will become the mandatory reference for classifying services on all National Electronic Service Invoices (NFS-e). The announcement by the Brazilian government marks a decisive move towards standardization and unification across the country’s tax and invoicing systems. Moreover, this is a key step in preparing for the implementation of Brazil’s new indirect taxes, the Tax on Goods and Services (IBS) and Contribution on Goods and Services (CBS).

Following the United Nations’ Central Product Classification (CPC), Brazil announced the implementation of the NBS as a standardized classification system for services, ensuring that Brazil’s service classifications align with international norms. By aligning the domestic and global standards, the Brazilian government seeks to increase the cross-border trade, improve transparency, and develop a firm foundation for upcoming changes to the tax system.

Importantly, the new system will ensure that the correct CBS and IBS rates and rules are applied under the new tax regime. For taxable persons, this means they will need to adapt their ERP and tax systems to accommodate the new XML structure for NFS-e. This includes adding new fields for CBS and IBS classifications, tax situation codes, and validation rules that reflect the revised digital invoicing framework.

Conclusion

The adoption of the NBS represents a fundamental modernization of Brazil’s service classification and tax reporting systems. While the national rollout of the NBS is scheduled for 2026, some municipalities, such as Barueri in São Paulo state, already adopted the NBS code structure ahead of time and have begun transitioning. Therefore, taxable persons must consider the national implementation timeline while also monitoring developments on the local level. 

Source: KPMG, VATabout