Type: Legislation
Effective Date: From 2026
Brazil’s 2026–2032 VAT reform introduces a targeted “Cashback” mechanism to reduce VAT’s regressive impact while maintaining a broad tax base and largely uniform rates. Instead of reduced rates or exemptions, low-income households receive personalised VAT refunds based on their actual spending on the new CBS (federal) and IBS (state/municipal) taxes. Taxes are paid at the point of sale and digitally tracked through invoicing systems, after which eligible families receive partial or full refunds directly to their bank accounts. The reform reflects a shift toward “personalised VAT,” seen as more efficient than blanket reduced rates that benefit all income groups. Brazil joins a growing global trend of using digital VAT systems to deliver targeted social support, building on domestic and international precedents.
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