Brazil has long faced a complicated tax landscape marked by fierce competition among states, cumulative taxes, and a web of regulations that confuse even seasoned experts. With the recent approval of tax reform and the advancement of the complementary law regulations, the tax landscape has undergone significant changes, prompting companies to adapt to a 'new tax chess' game. The introduction of the Dual VAT system (IBS and CBS) has raised expectations for simplification, yet the transition phase promises to be challenging for businesses.

From 2026 to 2033, companies will need to navigate a 'dual tax personality,' where they will be responsible for managing taxes under the old system (PIS, COFINS, ICMS, ISS) while simultaneously implementing and testing the new model. This transitional period is expected to be critical as businesses grapple with the complexities of the new rules, underscoring that the journey toward simplification may not be as straightforward as anticipated. The initial significant challenge emerging from this new structure is the shift from an origin-based tax system to a destination-based model, fundamentally altering how taxes are assessed and collected.

As the reform progresses, businesses and taxpayers will need to stay informed and adapt to these changes to ensure compliance and sustainability in the new environment. It is essential for the Brazilian government to provide adequate guidance and support throughout this transition to minimize disruption and help companies adapt effectively to the redefined tax rules. The implications of these changes could have far-reaching effects on the Brazilian economy, influencing corporate strategies and investment decisions.