What it is and what it aims to do
A tax reform changes the rules by which a government collects or administers taxes. Depending on its design, it can simplify or consolidate taxes, or change how they are collected. In Brazil, the reform approved in 2023 is intended to simplify tax collection across the federal, state, and municipal levels.
The reform was established by Constitutional Amendment No. 132/2023, based on Proposed Constitutional Amendment PEC 45/2019, and regulated by Complementary Law No. 214/2025. Its central aim, according to the supplied evidence, is to replace part of the current consumption-tax system with a model involving fewer taxes and reorganized collection rules, while also seeking greater transparency and efficiency.
Which taxes are being replaced
The new model provides for replacing PIS, Cofins, ICMS, ISS, and part of IPI with three taxes: the Contribution on Goods and Services (CBS), the Tax on Goods and Services (IBS), and the Selective Tax (IS). CBS and IBS are part of the change to consumption taxation, while the Selective Tax is also included among the new taxes created under the reform.
The change brings together taxes currently associated with different levels of government. It is therefore more than a change of names: collection rules and the distribution of revenue are also part of the reorganization. The stated aims include simplifying the system and pursuing economic neutrality while seeking to maintain the overall level of revenue.
How the transition works
Implementation is gradual, with the transition scheduled to continue through 2033. The supplied sources say the first effects begin in 2026, particularly in how consumption taxes are collected. During the transition, old and new rules interact according to the implementation schedule; the change should not be understood as an immediate replacement of every tax.
For businesses, the transition may require changes to tax processes, invoicing systems, and pricing plans. For taxpayers more generally, the key point is that the reform changes the structure of tax collection, while its practical effects depend on how the rules are implemented. Understanding which taxes are being replaced and the pace of the transition helps separate the reform’s broad aims from changes that will unfold over the scheduled period.