Transition Period of the Brazilian Tax Reform 2026-2033

The Tax Reform does not happen in a single event — it is a phased 7-year transition, spread across 5 successive milestones between 2026 and 2033. During this period, companies run the old system (PIS, COFINS, IPI, ICMS, ISS) and the new one (IBS, CBS, IS) simultaneously — requiring accounting, tax, operational and strategic adaptation in parallel. Each milestone has specific implications and requires advance preparation.

In short

Brazil's Tax Reform transition spans seven years and five milestones: January 2026 (test rates IBS 0.1%/CBS 0.9%, invoicing under Technical Note 2025.002), September–December 2026 (the first Simples Nacional decisions for 2027 under CGSN Resolution 194/2026), January 2027 (CBS charged at a reference rate still to be fixed, estimated at approximately 8.8%; PIS/COFINS extinguished for most sectors), January 2029 (IBS phase-in), 2033 (ICMS/ISS extinguished). For January–June 2027, the regular IBS/CBS election runs from September 1 through October 30, 2026; entry or return to Simples closes October 15, impediments may be cured through October 30, and either choice may be cancelled from November 3 through December 20. The March 1–31, 2027 election governs July–December and may be cancelled through May 31. Old and new taxes run in parallel until 2033.

The 5 transition milestones

Milestone 1 — Jan 2026: Testing phase

Token IBS of 0.1% and CBS of 0.9%. NT 2025.002 introduced the new NF-e fields, but version 1.51, published August 1, 2026, postponed automatic production enforcement through rejection code 1115 to a future implementation date. That system timetable must be distinguished from the underlying legal duty to issue a compliant tax document. The old system (PIS, COFINS, IPI, ICMS, ISS) remains at full rates. Focus: operational readiness, ERP/SAP, training of the tax team.

Milestone 2 — Sep–Dec 2026: Simples decisions for 2027

CGSN Resolution 194/2026 amended the original Resolution 186/2026 calendar. For January–June 2027, the election to assess IBS/CBS under the regular regime runs from September 1 through October 30, 2026. Entry or return to Simples closes October 15, with impediments curable through October 30. Either choice may be cancelled from November 3 through December 20, 2026. The next regular-regime election runs from March 1 through March 31, 2027 for July–December 2027, and may be cancelled through May 31, 2027. Choosing regular IBS/CBS assessment does not move the company to Lucro Real or Lucro Presumido: it remains in Simples for the other covered taxes. See Simples Decision 2027.

Resolution 194/2026 amended Resolution 186/2026: the first-half regular IBS/CBS election closes October 30, entry or return to Simples closes October 15, impediments may be cured through October 30, and either choice may be cancelled from November 3 through December 20. The second-half election runs March 1–31, 2027 and may be cancelled through May 31.

Milestone 3 — Jan 2027: CBS collection begins

CBS is charged at a reference rate still to be fixed (estimated at ~8.8%). PIS and COFINS are extinguished for most sectors. IPI remains residual only for the Manaus Free Trade Zone until 2033. The Selective Tax takes effect on harmful goods.

Milestone 4 — Jan 2029: IBS phase-in

IBS begins to rise progressively. ICMS and ISS start to be deactivated. Intense coexistence: a company may issue an NF-e with ICMS, ISS and IBS in the same operation according to the transition rule.

Milestone 5 — 2033: Old system extinguished

ICMS and ISS extinguished. Only IBS + CBS + IS in force. The transition is complete; the Brazilian dual system is stabilized.

Five successive milestones stage the transition between 2026 and 2033. The 2026 Simples milestone now follows Resolution 194/2026: first-half election by October 30 and cancellation from November 3 through December 20.

Year	New system (IBS / CBS / IS)	Old system (PIS, COFINS, IPI, ICMS, ISS)
2026	Token IBS of 0.1% and CBS of 0.9%; NF-e field rollout under NT 2025.002, with automatic rejection 1115 postponed by version 1.51	PIS, COFINS, IPI, ICMS and ISS at full rates
2027	CBS is charged at a reference rate still to be fixed (estimated at ~8.8%); the Selective Tax takes effect	PIS and COFINS extinguished for most sectors; IPI cut to zero, kept only for the Manaus Free Trade Zone (not extinguished); ICMS and ISS still at full rates
2028	CBS in collection; preparation for the IBS phase-in	ICMS and ISS still in force
2029	IBS begins to rise progressively (phase-in); CBS in collection; IS	ICMS and ISS start to be deactivated
2030—2032	IBS with the rate gradually increasing + CBS in collection + IS	ICMS and ISS with rates gradually decreasing (intense coexistence)
2033	Only IBS + CBS + IS in force; dual system stabilized	ICMS and ISS extinguished; old system fully wound down

Source: Tax Reform transition timeline — 5 milestones (Jan 2026 testing, Sep–Dec 2026 Simples decisions under CGSN Resolution 194, Jan 2027 CBS collection begins, Jan 2029 IBS phase-in, 2033 old system extinguished).

Coexistence: the operational challenge

The most complex period is between 2027 and 2032, when companies run simultaneously:

Old system: state ICMS + municipal ISS (with rates gradually decreasing)
New system: subnational IBS (with the rate gradually increasing) + full federal CBS + IS

NF-e under NT 2025.002 is designed to record the new tax fields alongside the legacy system. Version 1.51 postponed automatic production enforcement through rejection code 1115 to a future implementation date; that does not by itself remove the legal document requirements in force. Accounting must segregate revenue and taxes by regime, and ERP/SAP readiness must follow both the legal duty and the evolving technical schedule.

Between 2027 and 2032 the company runs both systems in parallel — the old one decreasing and the new one increasing — with the same NF-e recording both. Structuring the ERP in 2026 avoids continuous rework until 2033.

A limited window for retroactive credits

Before the current PIS/COFINS regime ends (Jan 2027) and ICMS ends (by 2033), there is a limited window to recover retroactive credits not yet used — Theme 69 (exclusion of ICMS), Theme 779 (essential inputs), STJ Theme 478 (employer-INSS indemnity amounts), ICMS credits on fixed assets, overpaid ICMS-ST, and dozens of other theses.

After the regime ends, these credits do not disappear legally (the five-year statute of limitations still applies), but recovery becomes more complex because the collection system is different. Recovery is best pursued during 2026.

Over seven years the new system (IBS, CBS, IS) rises while the old system recedes — with the most intense coexistence between 2029 and 2032, until the old system is extinguished in 2033.

Multi-year planning is mandatory

The transition does not allow year-by-year planning — it requires a multi-year view. Decisions made in 2026 have a direct impact in 2029, 2031, 2033. Examples:

Corporate reorganization: pre-Reform spin-offs/mergers may capture savings that the new system eliminates
Credit stock: the volume of accumulated PIS/COFINS credits may be converted into CBS in the transition (specific regulation)
Operation location: state incentives that depend on ICMS lose value — companies in incentivized states/regions must reassess
Long-term contracts: multi-year contracts with a tax clause must contemplate the transition

Critical decision windows

The critical decision windows of the transition. Decisions made in 2026 have a direct impact in 2029, 2031 and 2033.
Critical window	Decision it requires
May-Jun 2026	impact diagnosis and initial modeling
Sep 1–Oct 30, 2026	regular IBS/CBS election for Jan–Jun 2027; entry or return to Simples through Oct 15 and cure of impediments through Oct 30
Nov 3–Dec 20, 2026	cancellation period for either first-half choice under CGSN Resolution 194/2026
Oct-Dec 2026	ERP adjustments, training, recovery of pre-Reform credits
Mar 1–31, 2027	regular IBS/CBS election for Jul–Dec 2027 under CGSN Resolution 194/2026; cancellable through May 31
2027	first operational year with CBS in collection, fine-tuning
2028	preparation for IBS phase-in, reassessment of state incentives
2029-2032	intense coexistence, parallel management of both systems
2033	transition complete, old system extinguished

References and official sources

Multi-year transition plan — free assessment

Mapping of the Reform’s 5 milestones for your specific company, identification of opportunity windows and a realistic 2026-2033 readiness timeline.

Book a diagnostic

Frequently asked questions

How long does the Reform transition last?

The transition lasts a full 7 years — from January 2026 (testing phase) to December 2032 (the last year with the old system). Only in 2033 is the old system fully extinguished, with only IBS+CBS+IS in force. Five successive milestones punctuate the period: Jan 2026 (testing), Sep–Dec 2026 (first Simples decisions for 2027 under CGSN Resolution 194/2026), Jan 2027 (CBS collection begins), Jan 2029 (IBS phase-in), 2033 (old system extinguished).

Does a company need to adapt its ERP in 2026 or can it wait?

The company should keep adapting during 2026, but the enforcement status must be stated accurately. NT 2025.002 version 1.51, published August 1, 2026, postponed automatic production enforcement through rejection code 1115 to a future implementation date. This means an invoice is not automatically rejected under that rule merely because the new fields are absent today. The technical rule does not itself waive any legal duty to issue a compliant tax document, so ERP readiness and the applicable legislation must be monitored together.

When can I recover pre-Reform credits?

Short answer: now. The ideal window is until December 2026, before the end of PIS/COFINS for most. After January 2027, recovery is still legally possible (the statute of limitations is five years from payment), but operationally more complex because the collection system has changed. It is worth accelerating thesis diagnostics (Theme 69, Theme 779, Theme 478, etc.) during 2026.

What happens if my company enters judicial reorganization during the transition?

Companies in judicial reorganization follow specific rules — qualified tax credits may be paid with differentiated treatment via the PGFN tax settlement, and new credits during the reorganization are prioritized. The transition does not create a special regime for companies in judicial reorganization, but the tax settlement under Law 13,988/2020 offers more flexibility than ordinary installment plans.

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