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.

The 5 transition milestones

Milestone 1 — Jan 2026: Testing phase

Token IBS of 0.1% and CBS of 0.9%. NF-e under NT 2025.002 mandatory with new fields. The old system (PIS, COFINS, IPI, ICMS, ISS) at full rates. Focus: operational readiness, ERP/SAP, training of the tax team.

Milestone 2 — Sep 2026: Simples Decision 2027

A 30-day window (September 1-30) for B2B Simples companies to choose between staying in the unified regime or opting into the regular IBS/CBS regime. The option applies to Jan-Jun 2027 and can be cancelled until the end of November 2026 (CGSN Resolution 186/2026). See Simples Decision 2027.

B2B Simples companies have a 30-day window in September 2026 to opt into their 2027 regime — cancellable until November and effective for the first half of 2027.

Milestone 3 — Jan 2027: Full CBS

CBS rises to its full rate (~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 — each step requires advance preparation, and the last one ends the old system.

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 under NT 2025.002 mandatory	PIS, COFINS, IPI, ICMS and ISS at full rates
2027	CBS rises to its full rate (~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	Full CBS; preparation for the IBS phase-in	ICMS and ISS still in force
2029	IBS begins to rise progressively (phase-in); full CBS; IS	ICMS and ISS start to be deactivated
2030—2032	IBS with the rate gradually increasing + full CBS + 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 2026 Simples Decision, Jan 2027 full CBS, 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 must record both systems. Accounting must segregate revenue and taxes by regime. ERP/SAP must be configured to switch regimes depending on the operation. Companies that do not structure the ERP well in 2026 will face continuous rework until 2033.

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 single 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 one (ICMS, ISS) 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

May-Jun 2026: impact diagnosis and initial modeling
Sep 2026: Simples Decision 2027 (valid Jan—Jun 2027; cancellable until November 2026)
Oct-Dec 2026: ERP adjustments, training, recovery of pre-Reform credits
2027: first operational year under full CBS, 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.

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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 2026 (Simples Decision), Jan 2027 (full CBS), Jan 2029 (IBS phase-in), 2033 (old system extinguished).

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

It must adapt in 2026. NF-e under NT 2025.002 has been mandatory since January 2026 — the SEFAZ rejects the 4.0 format. Even with token IBS of 0.1% and CBS of 0.9%, the new fields must be filled in correctly, or the invoice is rejected. Waiting until 2027 (full CBS) means having to adapt in a rush, under real tax pressure.

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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