Brazil's Audit Court Suggests 11.3% Tax Rate for New CBS Tax

Brazil's federal audit court, the TCU (Tribunal de Contas da União), has proposed a reference rate of 11.3% for the new CBS tax, which is set to replace PIS and Cofins starting in 2027 under the country's sweeping tax reform.

The TCU, which oversees how public funds are managed in Brazil, released its calculation as part of ongoing technical discussions surrounding the implementation of the reform. The reference rate serves as a benchmark figure that lawmakers and regulators can use—and potentially adjust—before CBS becomes fully operational.

CBS, short for Contribuição sobre Bens e Serviços (Contribution on Goods and Services), is designed to consolidate multiple federal taxes into a single, more streamlined levy. The broader reform also includes a related tax at the state and municipal level, as both are intended to simplify what has long been considered one of the world's most complex tax systems.

Supporters of the reform argue that unifying PIS and Cofins into CBS will reduce administrative burdens for companies and improve transparency in how taxes are calculated and collected. Businesses have historically struggled with Brazil's fragmented and overlapping tax codes, which vary significantly across different sectors and regions.

Separately, Sebrae, the Brazilian Service for Support to Micro and Small Enterprises, has announced that it is developing a tax simulator aimed specifically at entrepreneurs. The tool is expected to help small business owners estimate how the upcoming changes, including the new CBS rate, could affect their operations and finances.

The tax reform, which has been years in the making, represents one of the most ambitious overhauls of Brazil's economic framework in recent history. Its full implementation is expected to unfold gradually, with 2027 marking a key milestone as PIS and Cofins are phased out in favor of the new consolidated system.