Complementary Law 214/2025.
The complementary law that regulates the tax reform, translated.

What LC 214/2025 is

Complementary Law No. 214, of January 16, 2025, is the law that regulates the consumption tax reform set out in Constitutional Amendment 132/2023. It is what takes the reform out of the constitutional plane and turns it into applicable rules: it institutes IBS, CBS and the Selective Tax, and creates the IBS Steering Committee, responsible for administering the new tax shared by states, the Federal District and municipalities.

It is one of the largest tax statutes ever enacted in the country: 544 articles, sanctioned with 15 vetoes. The new taxes replace five that exist today — PIS, Cofins, ICMS and ISS in full, and IPI in part. In practice, LC 214 redesigns the entire taxation of the consumption of goods and services and defines how the move from one model to the other will work.

The point that usually causes confusion: LC 214 does not set the rate of the new taxes. It builds the structure — tax base, regimes, credits, transition — but the reference rate will be defined later, by Senate resolution. That is why any total-burden figure circulating in the press is an estimate; it is not written in the law.

The normative hierarchy of the reform

LC 214 does not stand alone. The consumption tax reform is a set of rules in layers, and understanding which layer each one sits in avoids most of the confusion you see out there:

• EC 132/2023 — the constitutional amendment that created the new system (IBS, CBS and the Selective Tax) within the Constitution. It is the foundation: it establishes that the taxes come to exist and the general principles.
• LC 214/2025 — the complementary law that regulates that constitutional design: rules, regimes, credits, cashback and transition.
• LC 227/2026 — the complementary law that amends LC 214, adjusting provisions and adding topics left pending in the first version.
• Sub-statutory regulations — the decree regulating the CBS and the IBS Steering Committee resolutions, which descend to the operational, day-to-day level.

EC 132 and LC 214: what is the difference

The most common question. EC 132/2023 is the amendment that changed the Constitution and created the new system — it is from there that IBS, CBS and the Selective Tax are born. LC 214/2025 is the complementary law that regulates that creation: it takes the constitutional design and translates it into applicable rules, defining who pays, on what, with which credits and within which deadlines. One creates the system; the other says how it works.

The map of the law: book by book

The 544 articles of LC 214 are organized into three Books. Knowing where each topic lives is the first step to using the law as a tool, rather than as an indecipherable block of text:

Book I concentrates almost the entire law and is divided into eight Titles: General Rules; Special Customs Regimes; Personalized Refund (the cashback) and Basic Food Basket; Differentiated Regimes; Specific Regimes; CBS Differentiated Regimes; Administration; and Transition. It is in this book that IBS and CBS live, along with the broad-credit mechanism, the special regimes and the transition rule through 2033.

Book II deals exclusively with the Selective Tax, and Book III gathers the final and transitional provisions that did not fit in the others. For most companies, what matters in day-to-day operations is in Book I.

The key articles by topic

Not every article carries the same weight. A few provisions of LC 214 concentrate the topics that come up most often in companies’ questions. This is the quick map — each topic points to the page where it is unpacked:

IBS, CBS and the Selective Tax: the trio the law creates

At the heart of LC 214 are three taxes. IBS is the tax of shared competence among states, the Federal District and municipalities, which replaces ICMS and ISS. CBS is the federal contribution that replaces PIS and Cofins. And the Selective Tax is the federal, regulatory tax created to discourage the consumption of goods harmful to health and the environment. IBS and CBS share the same base and the same credit logic — together they form the Brazilian dual VAT; the Selective Tax is a separate tax.

What LC 227/2026 changed in LC 214

LC 214 is not a closed statute. Even before the regime came fully into force, it had already been amended by Complementary Law No. 227/2026, published on January 14, 2026. There were several changes — amendments to existing articles and the inclusion of new ones — and this is precisely the point that almost no source on the internet covers.

The most relevant additions brought by LC 227/2026:

• IBS Steering Committee (CGIBS) — the structuring of the body that administers the IBS, shared among states, the Federal District and municipalities.
• IBS administrative process — the rules for administrative dispute and litigation specific to the new tax.
• ICMS transition — the treatment of accumulated credit balances, used in installments until the tax is extinguished.
• Refund of IBS and CBS to foreign tourists — a reimbursement mechanism for purchases made in the country.
• Infractions and penalties — the sanctioning regime of the new system.

For anyone who needs to operate within the law, the lesson is direct: working with LC 214 today means working with LC 214 as already amended by LC 227. Consulting the original January 2025 version, which still circulates as a PDF, leads to wrong conclusions on the points that changed.

Phase-in calendar: 2026 to 2033

LC 214 is already in force, but its effects do not all arrive at once. The law designs a staggered transition, in which the old system is switched off to the same extent that the new one is switched on. In summary:

• 2026 — testing phase. CBS and IBS come in at minimum rates (CBS 0.9% and IBS 0.1%), creditable, only to calibrate the system.
• 2027 — full CBS and Selective Tax. CBS takes full effect, the Selective Tax begins, PIS and Cofins are extinguished and IPI is reduced to zero — except in the Manaus Free Trade Zone.
• 2029 to 2032 — transition. IBS rises in increasing proportion, year by year, while ICMS and ISS are reduced to the same extent.
• 2033 — full regime. Definitive extinction of ICMS, ISS and IPI; the new system takes full effect.

The cashback follows this rhythm: the refund on CBS begins in January 2027 and the one on IBS in January 2029. The year-by-year detail of each percentage and each obligation is on the page dedicated to the transition period — here we keep only the overview.

What LC 214 changes for your company

Translated from the legal text to the operation, LC 214 touches concrete points of the business — and the effect varies according to each company’s tax regime and sector:

• Cash flow. With split payment, the tax is segregated at the moment of payment, instead of being collected the following month. This changes working capital and requires reprogramming the financial flow.
• Invoices and systems. Highlighting IBS, CBS and the Selective Tax on fiscal documents demands ERP adaptation, parameterization and training — it is not a last-minute adjustment.
• Impact by regime. Companies on actual profit, presumed profit and the Simples Nacional feel the reform differently; the broad credit of art. 47 benefits some more than others. The reading must be done case by case, as detailed in impact of the reform on companies.

An honest note on what still depends on regulation: the reference rates will be set by Senate resolution; several operational details depend on acts of the IBS Steering Committee; and the fine-grained dates for the split payment obligation are not all settled. Planning on the basis of what is already certain, and monitoring what remains open, is the way to go.

The TaxUp team reads LC 214 applied to the reality of each operation — mapping, article by article, what changes in the business and in what order to act. The starting point is a diagnostic of the company’s current position in the face of the new system.