By Maria Eduarda X. Soares and Heloísa Nogueira
The enactment of Supplementary Law No. 227/2024, combined with regulatory rules taking effect in 2026, consolidates the gradual replacement of ICMS, ISS, IPI, PIS, and Cofins with two value-added taxes: the IBS (Tax on Goods and Services)—under the shared jurisdiction of states and municipalities—and the CBS (Contribution on Goods and Services)—under federal jurisdiction.
The Supplementary Law establishes the initial framework for the new regime, particularly regarding broad non-cumulativity. Credits will now be financial in nature, no longer tied to the essentiality or intended use of the input. In theory, any tax paid within the supply chain generates a credit, provided it is linked to a taxable transaction. This design aims to eliminate so-called "cascading taxation" but brings the challenge of redefining the concept of a taxable transaction and managing the credit chain.
In this context, the role of the Federal Revenue Service and the new IBS management committees becomes central. Tax oversight shifts from being—in theory—predominantly punitive and retrospective to becoming preventive.
From now on, tax compliance becomes a condition for operational survival. Parameterization errors, system failures, or registration inconsistencies can trigger automatic credit blocks, resulting in an immediate financial impact.
The nature of tax litigation, on the other hand, is likely to change. The promise of simplification fundamentally alters the landscape of disputes; classic conflicts regarding "fiscal wars," delaying tactics, and regional incentives will likely give way to controversies concerning credit claiming, the classification of transactions, and the legality of automatic blocks imposed by the tax authorities.
The Reform also directly impacts the economic structure of service provision, including legal services. Although reduced tax rates are projected for certain activities, the services sector—historically benefiting from a lighter ISS tax burden—is likely to face a relative increase in taxation. This compels firms to review their pricing models, corporate organization, and cost structures.
Finally, the Tax Reform brings a dual effect for law firms. In the short term, there is a significant surge in demand for advisory services. Companies need to redesign contracts, review supply chains, and re-evaluate corporate structures to adapt to the new destination-based taxation model; meanwhile, tax lawyers shift from merely defending past actions to being called upon to structure the future, focusing on transition and risk mitigation.
