The Brazilian government has announced a significant tax reform that will see the elimination of the PIS, Cofins, and IPI taxes by the end of this year. This change is expected to take effect in 2026, resulting in the loss of approximately R$ 40 billion in tax benefits that currently support various sectors of the economy. These fiscal incentives, which are exemptions or reductions in taxes for select regions or industries, will no longer be applicable once these taxes are removed.

As these taxes phase out, they will be replaced by the new Contribution on Goods and Services (CBS) – a federal consumption tax. The transition away from PIS, Cofins, and IPI is poised to have a significant impact on how fiscal policy is shaped and how benefits are distributed. The CBS, along with a selective tax referred to as the "sin tax," will alter the landscape of taxation in Brazil, potentially leading to broader discussions on the need for reform in the fiscal policy framework.

According to data from the Federal Revenue Service’s Tax Expenditure Demonstration (DGT), the current fiscal measures have been instrumental in maintaining a steady influx of revenue for the government. However, the upcoming changes signal a shift in priorities, potentially placing a heavier tax burden on consumers and altering the existing economic dynamics.