Split Payment.
Withholding at settlement.

How split payment works

Under the current regime, ICMS, ISS, PIS and COFINS are assessed by the taxpayer and paid via DARF/GIA within set deadlines (usually the following month). The supplier receives the gross amount of the sale — including the tax — and is then required to set it aside and remit it later.

With split payment, that flow changes:

1. The customer pays the invoice in full (product/service + IBS + CBS)
2. The payment system (bank, PIX, card) automatically identifies the IBS+CBS portion of the transaction
3. The tax portion is routed straight to the IBS/CBS Steering Committee — it never reaches the supplier’s account
4. The supplier receives only the net amount (price without the tax)

The result: tax is collected at the source of settlement, with no opportunity for default or diversion.

Impact on cash flow

Split payment reduces the working capital available to the company. Businesses that today receive the gross amount and use the tax as working capital until the due date (~30-45 days) will now receive the net amount directly.

Worked example

• Sale: BRL 100,000 + IBS BRL 18,700 + CBS BRL 8,800 = BRL 127,500 invoice
• Today: the company receives BRL 127,500 and pays ICMS+ISS+PIS+COFINS the following month (~BRL 27k)
• With split payment: the company receives BRL 100,000 directly (net amount). BRL 27,500 goes straight to the Steering Committee.

For companies with high volume and average collection terms, the impact can be significant — a loss of roughly 20-25% of the working capital historically available as “tax payable” on the balance sheet.

Required adaptations

• Strengthening working capital (credit line, shorter collection terms, receivables anticipation)
• Renegotiating commercial contracts with an explicit tax clause
• Adjusting projected cash flow and financial indicators

Collection efficiency

Split payment is one of the Reform’s biggest innovations from a fiscal efficiency standpoint. It drastically reduces:

• Tax default — a company cannot “fail to pay” the tax; it is withheld at source
• Evasion through revenue omission — every identified financial transaction is taxed
• Audit cost — the Federal Revenue does not need to monitor remittance; it is automatic
• Tax litigation — less dispute over deadlines, penalties and interest

The model is inspired by similar systems in Italy (VAT split payment) and Poland (mechanizm podzielonej płatności). In Brazil it will be implemented at a much larger scale — all B2B operations subject to IBS/CBS will have split payment active.

ERP adaptation

The integration between the ERP/management system and banks/PIX/cards must be adjusted to recognize and process split payment:

• Identifying the tax portion on each NF-e 5.0 issued
• Automatic reconciliation between gross amount invoiced, net amount received and tax routed to the Steering Committee
• Split-executed report per period (required for assessment)
• Handling returns and cancellations — an executed split must be reversed

Companies with simple ERPs (Conta Azul, Bling) receive the adaptation automatically via a software update. Companies with customized SAP or proprietary ERPs need a specific technical project — usually 3-6 months, costing BRL 50k-BRL 200k.