CBS — Contribution on Goods and Services: what changes

CBS (Contribution on Goods and Services) is the new federal consumption tax created by the Tax Reform to replace PIS and COFINS. It has a reference rate of approximately 8.8%, with full effect on January 1, 2027. Unlike the current PIS/COFINS (with cumulative and non-cumulative regimes plus dozens of special regimes), CBS adopts full non-cumulativity and a single regime — removing complexity that has been in place since 2002.

What CBS replaces

CBS replaces two federal consumption contributions:

PIS (Social Integration Program) — currently 0.65% (cumulative) or 1.65% (non-cumulative)
COFINS (Contribution for Social Security Financing) — currently 3% (cumulative) or 7.6% (non-cumulative)

CBS unifies PIS and COFINS into a single federal tax (~8.8%). IPI, also federal, is reduced to zero separately — except in the Manaus Free Trade Zone.

Dimension	PIS/COFINS (current regime)	CBS (from Jan 2027)
Taxes	PIS and COFINS (federal contributions)	Single federal tax (CBS)
Jurisdiction	Federal Union (two contributions)	Federal Union (single regime)
Rate	PIS 0.65% (cumulative) or 1.65% (non-cumulative); COFINS 3% (cumulative) or 7.6% (non-cumulative)	Reference rate of approximately 8.8%
Regimes	Cumulative and non-cumulative, plus dozens of special regimes	Full non-cumulativity, single regime
Credit	No credit under the cumulative regime (3.65% on revenue); credit on inputs under the non-cumulative regime (9.25%)	Full credit under every regime
Single-phase regime	In force for fuels, medicines, cosmetics, auto parts and beverages	Ceases to exist — each link pays on what it sells
Full effect	In force until Dec 2026 (token CBS of 0.9% in 2026)	January 1, 2027, with the end of PIS and COFINS

Source: Constitutional Amendment 132/2023 and LC 214/2025 (Brazilian Tax Reform).

With CBS, these two levies are unified. Importantly, the IPI will continue to exist residually for products of the Manaus Free Trade Zone (until 2033) and for the Selective Tax (which partially replaces the regulatory function of IPI).

Reference rate ~8.8%

The projected reference rate for CBS is approximately 8.8%. It is lower than the current combined burden of PIS+COFINS (which can reach 15-20% in some sectors), because the subnational IBS of ~18.7% is also factored into maintaining federal revenue.

Combined IBS+CBS: ~27.5% to 28% on consumption — within the parameters designed by Constitutional Amendment 132/2023 to keep total revenue neutral.

The same differentiated regimes as IBS apply:

Zero rate for the basic food basket and special medicines
60% reduction for health, education, public transport
Cashback for CadÚnico (social registry) families on essential consumption

CBS timeline

Jan 2026: token CBS of 0.9% (testing phase), PIS/COFINS/IPI at full rates
Jan 2027: full CBS (~8.8%), end of PIS and COFINS for most sectors
2027 onward: residual IPI only for the Manaus Free Trade Zone until 2033

Important: full CBS takes effect 2 years before IBS (January 2027 vs January 2029). This means that during 2027-2028, companies will have full CBS plus ICMS/ISS still in force — a period of specific accounting complexity.

CBS has no phase-in: it jumps from the testing phase (0.9% in 2026) straight to full effect (~8.8%) in January 2027, two years ahead of IBS.

End of the residual cumulativity of PIS/COFINS

Today, PIS/COFINS has two regimes:

Cumulative (Presumed Profit, certain activities): 3.65% on revenue, with no right to input credits
Non-cumulative (general Actual Profit): 9.25% on revenue, with credit on inputs

Practical result: companies under the cumulative regime carry residual cumulative taxation on every purchase they make. CBS removes this distinction — every regime adopts full non-cumulativity. Presumed-Profit companies with a high volume of creditable inputs gain substantially; companies with few creditable inputs (professional services) may see an increased burden.

Under the cumulative regime, the 3.65% of PIS/COFINS generates no credit; under CBS, every tax paid becomes a full credit — those with many creditable inputs tend to gain.

End of the single-phase regime

Fuels, medicines, cosmetics, auto parts and beverages currently have a single-phase PIS/COFINS regime — the manufacturer/importer pays for the entire chain, and the following links (wholesalers, retailers) resell at a zero rate.

With CBS, the single-phase regime ceases to exist. Each link in the chain pays CBS on what it sells, with a full credit for what it paid. Sectors that are single-phase today will gain operational simplification but a different cash flow — wholesalers and retailers that today buy already taxed at origin will now pay CBS on their own operation.

With the end of the single-phase regime, each link in the chain now collects CBS on its own operation, with a full credit — it simplifies, but it changes the cash flow.

References and official sources

Free CBS impact assessment

Calculation of your company’s projected effective rate after CBS by revenue line, with identification of pre-CBS opportunities (retroactive PIS/COFINS credits).

Book a diagnostic

Frequently asked questions

Does CBS replace PIS, COFINS and IPI?

No. CBS replaces only PIS and COFINS with a single federal tax of approximately 8.8% reference rate; PIS and COFINS are extinguished in January 2027. The IPI is not replaced by CBS: from 2027 its rates are cut to zero for most products, except for incentivized industrialization in the Manaus Free Trade Zone, where it is maintained.

When does CBS take effect?

A token CBS of 0.9% since January 2026 (testing phase). Full CBS (~8.8%) in January 2027, with the simultaneous end of PIS and COFINS for most sectors. Unlike IBS, CBS has no phase-in — it takes full effect at once.

Do Presumed-Profit companies pay more or less under CBS than under current PIS/COFINS?

It depends on the volume of creditable inputs. Presumed Profit today pays cumulative PIS/COFINS of 3.65% with no credit. CBS is 8.8% but with a full credit. Companies with many inputs (purchases, energy, freight) tend to have a similar or lower burden. Companies with few inputs (pure services) tend to see an increase.

What is the effect on the recovery of pre-Reform credits?

The window to recover retroactive PIS/COFINS credits before the current regime ends is critical. Theses such as Theme 69 (exclusion of ICMS), Theme 779 (essential inputs) and the exclusion of ISS (Theme 118) must be analyzed over the next 18-24 months, before full CBS replaces the current regime in January 2027.

Back to Brazilian Tax Reform 2026—2033

TECHNICAL AUTHORSHIP

TaxUp Tax Practice

Brazilian Tax Law

Content produced by the TaxUp technical team and reviewed by a senior consultant before publication. Meet the firm →

Bring this analysis to your company’s case

30 minutes with a senior consultant. We map your specific tax scenario and point out the technical path forward — no obligation.