The Brazilian government has moved forward with the implementation of a new federal tax that will take effect in January 2027
With the new CBS of 11.3%, the nominal increase compared to the 3.65% rate will reach 209.6%. Thus, small businesses will face a rate significantly higher than what they currently pay under the existing tax scheme.
Additionally, the new tax will apply to both domestic and imported products, including international purchases. This will expand its reach over consumption operations and the entry of foreign goods into the Brazilian market.
After the electoral fraud carried out in the runoff to secure 4 more years in power, the socialist dictator Lula da Silva announced a new tax burden increase and the implementation of an 11.3% VAT-type consumption tax.
This is the Contribution on Goods and Services (CBS), one of the main components of the tax reform promoted during the current dictatorship, which will replace the current federal consumption taxes.
The new reference rate was approved on Wednesday the 28th by the Union Court of Accounts (TCU), during an extraordinary session of its Plenary.
The percentage will be used as a basis to establish the definitive rate, which will be determined by the Federal Senate by December 15. The effective application of the tax is scheduled for January 2027.
The change will have a significant impact on companies, especially those that currently pay a lower rate. So far, federal consumption taxes include rates of 3.65% for smaller companies and 9.25% for larger businesses.
The CBS will replace federal taxes that currently tax consumption, including the Social Integration Program (PIS) and the Contribution for the Financing of Social Security (Cofins).
The formal objective of the reform is supposedly to "simplify the Brazilian tax system," reduce the accumulation of taxes at different stages of production and marketing, and increase transparency.
The calculation of the reference rate was carried out by the TCU, which worked during 2026 alongside technical teams from the Federal Revenue and the Ministry of Finance.
The approval of 11.3% represents a new tax increase on various sectors of the economy starting in 2027 following the reform promoted by Lula's regime.
