Healthcare-specific regime in the Brazilian Tax Reform.
A 60% reduction in CBS and IBS, a dedicated regime for health plans, and a zero rate for critical medicines.

Constitutional basis and architecture of the regime

EC 132/2023 art. 9 — the constitutional authorization for the 60% reduction

The healthcare-specific regime has its constitutional roots in art. 9 of Constitutional Amendment 132/2023, which authorized the complementary law to set differentiated regimes with a 60% reduction on the standard IBS and CBS rate, or a zero rate, for a delimited set of goods and services deemed socially essential. The provision expressly lists: health services, medical devices, accessibility devices for persons with disabilities, medicines, basic menstrual-health care products, education, public transport, farming, horticultural, fishing and forestry products, agricultural inputs and foods intended for human consumption. The authorization is not a vested right of the sector — it depends on infraconstitutional regulation, which came with LC 214/2025.

LC 214/2025 — three parallel treatments for the healthcare chain

LC 214/2025 did not consolidate every healthcare agent into a single regime. The legislative choice was to split the treatment three ways according to the nature of the operation:

• Health services, medical devices and medicines not listed in Annex XIV — subject to the general CBS and IBS regime with a 60% reduction on the sum of the reference rates (art. 130 + Annex III).
• Critical medicines — a zero rate for the 383 active ingredients listed in Annex XIV, focused on oncology, immunosuppressants, vaccines, rare and immune-mediated diseases.
• Health plan operators — a dedicated assessment regime governed by arts. 234 to 243, with a tax base computed on a basis-on-basis logic (revenue net of claims and brokerage) and a rate reduced by 60%.

This segmentation has a relevant practical effect: the pharmaceutical industry must map each SKU against Annex XIV; hospitals and clinics must classify services against Annex III; operators must redesign assessment systems to support the basis-on-basis logic. Each group faces a distinct adaptation curve.

LC 227/2026 — refinements on corporate crediting

Enacted on January 13, 2026, LC 227/2026 introduced more than 120 technical adjustments to LC 214/2025, in addition to establishing the IBS Steering Committee. For the healthcare sector, the sensitive point was confirmation that providing a health plan to employees, where set out in a collective bargaining agreement, gives the employer the right to credit CBS and IBS — ruling out the restrictive interpretation that treated the plan as a personal-use good with no right to credit. Transport, meal and food vouchers came to generate a credit without the need for a collective agreement; the health plan, however, kept the requirement of a provision in an agreement or collective bargaining agreement to generate an employer credit.

Tax-policy rationale — social relevance and equity

The choice to relieve the healthcare chain reflects a constitutional decision anchored in art. 6 of the Federal Constitution — health as a fundamental social right — and in the complementarity between the Unified Health System (SUS) and supplementary health care. By reducing taxation on services, medicines and devices, the legislature sought to curb the regressivity of indirect taxation on low- and middle-income families, which spend a proportionally larger share of their budget on these essential goods. The Explanatory Memorandum EM 038/2024-MF to PLP 68/2024 — which became LC 214/2025 — made this logic explicit in its statement of reasons.

Health services — a 60% reduction (art. 130 + Annex III)

What qualifies under Annex III

Annex III of LC 214/2025 lists the health services subject to the 60% reduction, organized by their classification in the Brazilian Services Nomenclature (NBS). In summary, they comprise:

• Hospital and outpatient medical services — admissions, consultations, surgical procedures, emergency procedures and hospital daily rates.
• Dental services — clinical, surgical, orthodontic, periodontal, implant.
• Physical therapy, occupational therapy, speech therapy, clinical psychology and clinical nutrition services.
• Laboratory exams — clinical analyses, pathological anatomy, cytopathology, microbiology.
• Imaging and diagnostic exams — radiology, ultrasonography, tomography, MRI, nuclear medicine, densitometry.
• Hemotherapy, hemodialysis, oxygen therapy and home mechanical ventilation services.
• Home nursing, home care, palliative assistance and continuous-care services.
• Medical transport (ambulances) and specialized medical removal services.

Qualification depends on the NBS code assigned to the service — a classification that will progressively replace the list annexed to Complementary Law 116/2003, the legal framework of the ISS, over the 2026-2033 transition.

Effective rate — the practical calculation

The 60% reduction applies to the sum of the reference rates of CBS (federal) and IBS (state and municipal). Considering a combined standard rate estimated at around 26.5% after the Federal Senate sets it, the effective rate for health services falls to roughly 10.6%. The final assessment depends on the reference rates actually set by the Senate under art. 18 of LC 214/2025 and on the calibration fiscal years between 2027 and 2033.

Physician as a legal entity and as an individual — who is a taxpayer

Individuals who provide medical services autonomously — without forming a company — are not ordinary taxpayers of CBS and IBS, save for the exceptional case of art. 22 of LC 214/2025 (digital-platform operators). Physicians set up as legal entities — simple companies, single-member medical companies (Law 13.247/2016), limited liability companies — are full taxpayers. The choice of tax regime together with the corporate structure gains renewed importance under the Reform: a medical company on Actual Profit with relevant revenue may capture broad CBS and IBS crediting, whereas companies on Simples Nacional follow their own specific regime with no full crediting.

Philanthropic hospitals and Santas Casas — immunity preserved

The tax immunity of non-profit education and social-assistance entities, guaranteed by art. 150, VI, “c”, of the Federal Constitution and regulated by art. 14 of the National Tax Code, remains applicable to Santas Casas and philanthropic hospitals that meet the legal requirements — no distribution of profits, full application of resources in Brazil, regular bookkeeping. The STF case law consolidated in Theme 581 (RE 566.622, reporting Justice Marco Aurelio, judged 02/23/2017) settled that regulating the material requirements of the immunity is a matter reserved to a complementary law — a view that binds the application of the regime to philanthropic hospitals under the new IBS/CBS. The immunity does not, however, dispense with compliance with the ancillary obligations set out in LC 214/2025 and in the SPED regulation.

Medicines — a zero rate (Annex XIV) and a 60% reduction (Annex III)

Annex XIV — 383 active ingredients with a zero rate

Annex XIV of LC 214/2025 lists 383 active ingredients of medicines subject to a reduction of CBS and IBS rates to zero. Organizing by chemical substance — rather than by brand name — preserved competitive neutrality among manufacturers of reference, similar and generic medicines. The composition of the list concentrates on:

• Oncology — classic chemotherapeutics, targeted therapies (tyrosine-kinase inhibitors, immune checkpoint inhibitors), hormone therapy and radiopharmaceuticals.
• Immunotherapeutics and immunobiologicals — monoclonal antibodies for autoimmune diseases (rheumatoid arthritis, psoriasis, Crohn’s disease, ulcerative colitis).
• Rare diseases — therapies for cystic fibrosis, spinal muscular atrophy, pulmonary arterial hypertension, hemophilia, Duchenne muscular dystrophy.
• HIV/Aids — antiretrovirals provided for in the SUS protocol.
• Vaccines — bacterial, viral, recombinant and mRNA vaccines listed in the National Immunization Program (PNI) schedules.
• Insulins and analogues — for the treatment of diabetes mellitus.
• Direct oral anticoagulants (DOACs) and antiarrhythmics — selected.

Medicines not listed in Annex XIV are subject to the 60% reduction set out in art. 130 and Annex III — an effective rate around 10.6%. Veterinary medicines and hygiene products that do not qualify are subject to the full rate.

Inclusion criteria and the role of Anvisa regulation

The inclusion of active ingredients in Annex XIV combines a clinical-epidemiological criterion — severity of the disease, prevalence, absence of an equivalent therapeutic alternative — with an assessment of the fiscal impact. Infralegal regulation by the IBS Steering Committee (set up by LC 227/2026) and the Federal Revenue Service, working with Anvisa, will define criteria for periodically revising the list — relevant because new biological medicines and advanced therapies (CAR-T, gene editing) will require updates. The pharmaceutical industry must monitor inclusion and exclusion requests through the Ministry of Health and the Medicines Market Regulation Chamber (CMED).

The production chain and crediting under a zero rate

Operations subject to a zero rate generate no debit for the recipient, but the manufacturing industry keeps the right to fully credit the taxed upstream acquisitions — the principle of full non-cumulativity enshrined in art. 156-A, § 1, of the Constitution. The effect is the complete economic relief of the medicine at the end point. For manufacturers, confirming broad crediting is especially relevant given the history of litigation under the non-cumulative PIS/Cofins regime over the concept of input — an issue the STJ addressed in Theme 779 (REsp 1.221.170, reporting Justice Napoleao Nunes Maia Filho, judged 02/22/2018) and which remains a relevant interpretive precedent until the end of the transition. On the topic, see the specific analysis on PIS/Cofins recovery.

Medical devices, prostheses and orthoses (Annex III)

Annex III coverage by NCM

Medical devices and health products listed in Annex III of LC 214/2025 are subject to the 60% reduction in the CBS and IBS rates, classified by the Mercosur Common Nomenclature (NCM). The list includes, among others: diagnostic-imaging equipment (NCM 9018, 9022), wheelchairs and accessibility devices (NCM 8713), oxygen-therapy and ventilation devices (NCM 9019), orthopedic, dental and cardiovascular prostheses (NCM 9021), orthoses, intraocular lenses, pacemakers, coronary stents, osteosynthesis materials, diagnostic kits for clinical analyses and reagents for in-vitro diagnosis. The correct fiscal classification of products by NCM remains the determining factor for applying the reduced rate — classification errors may lead to an assessment demanding the full tax plus penalties and interest.

Imports and the tax base on entry

On imports of medical devices, the CBS and IBS tax base follows art. 12 of LC 214/2025 — the customs value plus Import Duty, federal taxes levied on import and customs expenses. The 60% reduction applies to that base, subject to the maintenance of the constitutional immunities applicable to imports by immune entities (universities, philanthropic hospitals, the Union, States, the Federal District and Municipalities — art. 150, VI, of the Constitution). For multinationals operating in the sector — manufacturers of imported medical devices, distributors headquartered abroad — the integration between the healthcare regime and the transfer pricing rules introduced by Law 14.596/2023 is a sensitive point: the intra-group transfer price must simultaneously observe the arm’s-length standard and the documentary-evidence requirements to avoid a federal assessment and arbitration of the tax base.

Accessibility devices for persons with disabilities

Accessibility devices — wheelchairs, prostheses, orthoses, technical aids, hearing aids, screen-reading software, alternative-communication equipment — received specific treatment in Annex III on the basis of art. 9, § 1, of EC 132/2023, which singled out this group as eligible for the 60% reduction. Specific regulation will detail the list of equipment and the conditions for entitlement, in conjunction with the Brazilian Inclusion Law (Law 13.146/2015).

Health plans — the dedicated regime (arts. 234-243)

Who is in the regime — subjective scope (art. 234)

The dedicated regime of arts. 234 to 243 of LC 214/2025 covers all operators registered with the National Supplementary Health Agency (ANS): health-specialized insurers, medical and dental cooperatives (Unimed and Uniodonto modalities), group medicine, group dentistry, benefit administrators, sponsored self-management, non-sponsored self-management and philanthropic plans. The scope reaches operators of individual plans, corporate group plans, group plans by membership, dental plans and health insurance.

Tax base — the basis-on-basis logic (art. 235)

The most delicate technical point of the regime is the tax base. Art. 235 of LC 214/2025 adopted the basis-on-basis system: the base is the operator’s net revenue, made up of premiums received, monetary consideration, co-responsibilities, and financial income from the assets backing technical reserves actually settled — less the following deductions:

• Indemnities paid, claims settled, medical events paid or provisioned as claims outstanding.
• Amounts related to cancellations and refunds of premiums.
• Administration fee paid to benefit administrators.
• Amounts paid to brokers on intermediation.

The practical effect is that the operator taxes only the net technical and financial margin — not the gross premium received. This logic preserves the economic function of the health plan as a risk-pooling instrument and prevents double incidence on the premium and on the claim paid to the accredited network (which, in turn, taxes the medical service under the regime of art. 130).

Uniform national rate — a 60% reduction (art. 237)

Art. 237 of LC 214/2025 established that the IBS and CBS rates in the specific regime for health plans are nationally uniform — there is no variation by federative entity, even for the IBS. The rates correspond to the sum of the reference rates reduced by 60%. For pet health plans, the reduction is only 30% (art. 234, sole paragraph, II), and the buyer is barred from taking a credit — a distinction that reflects the non-essential nature of this modality.

Widening the base — an active scholarly debate

The interpretation of art. 235 as to what should make up the concept of “financial income from the assets backing technical reserves actually settled” has been the subject of relevant scholarly debate. Analyses published in specialized legal outlets point to a risk of widening the base through an expansive tax-authority interpretation, reaching financial income from invested reserves that would not match the economic nature of remuneration for the pooling service. The consolidated case law on the concept of revenue, set by the STF in the joint judgment of RE 574.706 (Theme 69 — exclusion of ICMS from the PIS/Cofins base, reporting Justice Carmen Lucia, judged 03/15/2017) and its modulatory rulings, will be the interpretive reference for delimiting what may and may not be part of the operators’ IBS/CBS base. A dedicated cluster on the topic is available at PIS/Cofins recovery.

The buyer’s credit — the limits of art. 240

The dedicated regime imposes an important restriction on the buyer of the health-plan service: the credit of CBS and IBS by the contracting legal entity is admissible only when the plan is provided to an employee and is set out in an agreement or collective bargaining agreement, as refined by LC 227/2026. The original rule of LC 214/2025 already allowed crediting on corporate group plans; LC 227/2026 clarified the requirement of a contractual provision and aligned the treatment with that already given to transport, meal and food vouchers (which, however, do not require a contractual provision). For companies that provide a health plan with no contractual provision — a common situation in small and medium-sized companies — the credit of CBS and IBS is barred, and the tax cost is trapped. A dedicated cluster on financial credit in the Reform goes deeper into the logic of broad crediting.

The 2026-2033 transition and immediate practical impacts

Transition calendar applicable to the sector

LC 214/2025, in arts. 125 to 134, and EC 132/2023 set a gradual implementation calendar:

• 2026 — testing phase for CBS and IBS with no collection effect (a 0.9% rate for CBS and 0.1% for IBS, offsettable against PIS/Cofins).
• 2027 — full entry of CBS (replacing PIS and Cofins) and extinction of IPI for most products (surviving only for items with the Selective Tax). The IBS begins with a 0.1% test rate.
• 2029-2032 — proportional reduction of the ICMS and ISS rates and a gradual rise of the IBS, with a transition factor defined by a Senate resolution.
• 2033 — definitive extinction of ICMS and ISS; IBS and CBS fully in force.

A complete breakdown is available at the transition period of the Reform.

Reworking contracts — prices, adjustment and tax clauses

Multi-year contracts signed between operators and providers (hospitals, clinics, laboratories), between operators and contracting parties (companies, individuals), and between industry and distributors, were negotiated under the old regime — with PIS, Cofins, ISS and ICMS embedded in the price. The coexistence of regimes during the transition requires reviewing adjustment clauses, net-price versus gross-price policy, and the treatment of the financial effects of additional crediting or loss of crediting. Contracts that do not provide for an automatic tax pass-through mechanism are exposed to revision litigation over excessive onerousness (Civil Code art. 478) or over the economic-financial equation (Law 8.666/93 and Law 14.133/2021, in public procurement).

ERPs, NFS-e, NF-e and adapting to the new classification

Hospital management systems (HIS), electronic medical records, billing (TISS), financial and supply ERPs must be adapted to the new taxonomy. Each service provided will be classified by an NBS code; each medicine dispensed, by NCM and active ingredient (to check inclusion in Annex XIV); each medical device, by NCM in Annex III. Adapting to the Reform NF-e (NT 2025.002), which structures the new fields for CBS, IBS, the Selective Tax and split payment, is a critical step — without it, the system will not be able to issue a valid fiscal document from January 2027.

Operators — impact on assessment, technical reserves and provisions

For health plan operators, the dedicated regime of arts. 234-243 requires a complete reworking of the tax assessment: systems must capture net premiums, claims paid, claims outstanding, administration fees and intermediation costs on a monthly basis, with full accounting-fiscal integration. Claims provisions (PEONA, PESL) directly affect the tax base — which brings the tax assessment closer to actuarial control, widening the need for integrated technical governance. For self-management plans and medical cooperatives, the additional challenge is to properly map the co-responsibility and the pass-through to the cooperative members.

Deferral and cash management

Even though the healthcare regime has favored treatment, the transition will produce relevant cash effects. Operators that today collect cumulative PIS/Cofins on gross premiums (an effective rate of 4.65%) will migrate to the basis-on-basis regime with an effective rate close to 10.6% on the net margin — an effect that may be positive or negative depending on the loss ratio. Private hospitals that today collect ISS (between 2% and 5% depending on the municipality) plus cumulative PIS/Cofins (3.65%) will migrate to 10.6% effective with broad crediting on entry — the net effect depends on the mix of taxed upstream costs. A dedicated analysis of the Reform’s impact on companies goes deeper into the effects by business model.

How TaxUp works in the healthcare-specific regime

Full tax diagnostic by business model

The work begins with a sector-specific diagnostic — operator, hospital, clinic, laboratory, pharmaceutical industry, distributor or medical-device manufacturer. For each model, TaxUp maps: classification under the applicable regime (art. 130, Annex XIV or arts. 234-243), NBS/NCM classification of services and products, a comparative tax-burden simulation (current regime versus full IBS/CBS), the impact on the sale price and margin, and the identification of additional crediting opportunities not captured in the current model. The analysis integrates with the recovery of tax credits from the PIS/Cofins, ICMS and ISS stock of the last five years.

Contract restructuring and updating of tax clauses

Review and renegotiation of multi-year contracts between operators and providers, between the pharmaceutical industry and distributors, between hospitals and companies contracting corporate plans. The focus is to introduce tax gross-up clauses, automatic adjustment mechanisms due to legislative changes, a clear definition of net price versus gross price, and the treatment of the effects of additional crediting or loss of crediting during the transition. Contract restructuring anticipates revision litigation over excessive onerousness and preserves the economic-financial balance.

Tax governance and systems adaptation

Technical coordination of the systems-adaptation project — financial ERPs, hospital billing systems (TISS), operators’ actuarial management systems, integration with the Reform NF-e (NT 2025.002) and the CBS/IBS modules. The work integrates the tax team with the technology team and the actuarial team, defines an NBS/NCM classification matrix, and establishes change governance for the 2026-2033 transition. Tax governance structured on the basis of tax due diligence and the discipline of SPED is a central element of the adaptation program.

Defense in preventive and strategic litigation

When the classification under the favored regime is challenged by the tax authority — a foreseeable situation at sensitive points such as NBS/NCM classification, the make-up of the operators’ tax base (widening), crediting on group plans with no contractual provision, or applying the reduction to medicines not clearly listed in Annex XIV — TaxUp conducts administrative defense at the CARF and judicial litigation through a writ of mandamus, an ordinary action or a declaratory action. The integration of preventive consulting and litigation is an essential part of the method.