How taxes work in Brazil: a guide to corporate taxation
Understand the corporate taxation rules in Brazil for 2026. We analyze income, consumption, payroll, and the impact of the tax reform transition on Simples Nacional, Lucro Presumido, and Lucro Real.
Corporate taxation in Brazil as of November 2026 requires attention to the technical coexistence between income taxes and the initial transition phase of consumption taxes. The Brazilian tax system is based on an annual choice between the regimes of Simples Nacional (Simplified National Tax), Lucro Presumido (Presumed Profit), or Lucro Real (Actual Profit), while the Tax Reform (Constitutional Amendment 132/2023) begins the gradual replacement of taxes such as PIS, Cofins, ISS, and ICMS by CBS and IBS. It is fundamental to note that the consumption reform does not extinguish IRPJ, CSLL, Import Tax (II), or social security and property charges.
This article is for informational purposes only and does not constitute individualized legal or tax advice. The cited regulations are subject to legislative changes and administrative interpretations by the Receita Federal do Brasil (Federal Revenue of Brazil) and other treasury bodies. The application of these rules depends on the date of consultation and the specific reality of each taxpayer.
The Brazilian tax landscape and the Consumption Reform
In November 2026, the Brazilian business environment is undergoing a structural transformation in the field of consumption. Although the pillars of income taxation (IRPJ and CSLL) remain in force under the consolidated rules of the Income Tax Regulation (Regulamento do Imposto de Renda), the system of taxation on goods and services begins the transition phase established constitutionally. For corporate planning, it is indispensable to distinguish the different taxable events: income, consumption, property, payroll, and foreign trade.
Companies operate under a legislative transition regime. While Complementary Law 123 (Lei Complementar 123) continues to govern the Simples Nacional, the new Dual VAT legislation — consisting of the Contribution on Goods and Services (CBS - Contribuição sobre Bens e Serviços) under federal jurisdiction and the Goods and Services Tax (IBS - Imposto sobre Bens e Serviços) under subnational jurisdiction — begins to be applied experimentally with reduced rates. This guide details current obligations to assist in compliance and the understanding of production chains.
Taxation on Income: IRPJ and CSLL
Regardless of the reform affecting consumption, taxation on the profits of legal entities follows distinct paths depending on the chosen regime. The Corporate Income Tax (IRPJ - Imposto de Renda Pessoa Jurídica) and the Social Contribution on Net Profit (CSLL - Contribuição Social sobre o Lucro Líquido) are calculated based on accounting profit or presumption margins.
In Lucro Real (Actual Profit), taxation is levied on the accounting net profit, adjusted by additions and exclusions provided for in tax legislation. This regime is mandatory for companies with annual revenue exceeding R$ 78 million in the previous calendar year, as well as financial institutions and companies with profits from abroad. In Lucro Presumido (Presumed Profit), the calculation base is simplified, applying presumption percentages on gross revenue, with different percentages per tax and activity: as a rule, commerce and industry use 8% for IRPJ and 12% for CSLL; many services use 32%, with legal exceptions.
The choice between models depends on the actual profitability margin of the operation. If the profit margin is effectively lower than the legal presumption, Lucro Real may be technically indicated, despite the increase in the complexity of ancillary obligations. For a detailed analysis of the choice between these models, see our article on Simples Nacional, Lucro Presumido or Lucro Real: how to compare regimes.
The transition to CBS and IBS in 2026
The Tax Reform introduces CBS and IBS with the objective of unifying consumption taxation. In 2026, the coexistence of these new taxes with traditional taxes (PIS, Cofins, IPI, ICMS, and ISS) begins. CBS is the federal portion, while IBS is the portion managed in an integrated manner by States and Municipalities.
The fundamental principle of this new structure is full non-cumulativity, where, as a rule, the tax paid in the previous stage generates credit for the following stage. Unlike the previous PIS/Cofins system, which had significant restrictions on what generated credit, the new system aims to allow broad utilization, requiring rigorous management of electronic tax documents. Learn more about the schedule in CBS and IBS in the tax reform: transition from 2026 to 2033.
Simples Nacional and the duality of credits
Complementary Law 123 remains valid, guaranteeing differentiated treatment for Micro-enterprises (ME) and Small Business Entities (EPP). However, the reform introduces a new dynamic for the utilization of credits by third parties. Companies enrolled in Simples Nacional can maintain unified collection in the Simples Nacional Collection Document (DAS - Documento de Arrecadação do Simples Nacional) or opt to collect CBS and IBS through the regular (non-cumulative) regime.
If the company chooses to remain exclusively in the simplified collection within the DAS, it transfers credits limited to the amount effectively paid of CBS/IBS within the single guide to its clients operating in Lucro Real or Presumido. This may impact the competitiveness of suppliers in B2B (Business to Business) chains, requiring comparative calculations to determine if migrating to the regular collection of CBS/IBS, even while keeping other taxes in Simples, is advantageous.
Taxation on Payroll and Charges
Changes in consumption taxation do not eliminate charges on labor. Companies must bear the Employer Social Security Contribution (CPP - Contribuição Previdenciária Patronal), which in the general regime is 20% on the payroll, except for sectors with current payroll tax relief (desoneração) or companies in Simples Nacional (Annexes I, II, III, and V). In addition, obligations regarding FGTS (8%) and RAT (Workplace Environmental Risks - Riscos Ambientais do Trabalho) remain.
Contributions destined for third parties (Sistema S) also persist, varying according to the FPAS code of the activity. Payroll management requires constant attention to remuneration amounts, which make up the social security calculation base, as opposed to amounts of a strictly indemnity nature, according to the jurisprudence of higher courts and Federal Revenue guidelines.
Taxes on Property and Foreign Trade
Companies that own vehicles or urban and rural real estate continue to be subject to IPVA, IPTU, and ITR, respectively. In foreign trade, the Import Tax (II - Imposto de Importação) remains as a tool of commercial policy and revenue collection on the entry of foreign goods. The reform ensures that CBS and IBS also apply to imports, aiming for tax equality with national products, while exports are immune, guaranteeing the right to maintain credits accumulated along the production chain to avoid the export of taxes.
Decision criteria for tax planning
To define the tax structure in 2026, corporate management must consider:
- Effective Profit Margin: Reduced margins or tax loss situations can make Lucro Real more efficient than Presumido.
- Volume of Inputs and Credits: The new CBS/IBS requires that the cost of inputs be evaluated by their net value of recoverable taxes.
- Customer Profile: Suppliers to large industries may face commercial pressure to operate under the full credit regime of CBS/IBS.
- Location and Incentives: The transition of ICMS and IPI tax benefits must be monitored according to the gradual phase-out rules in PIS/Cofins, CBS and IPI: how to prepare cash for the 2027 transition.
Relevant Facts in Tax Management
A common error is negligence in the tax classification of goods (NCM - Mercosul Common Nomenclature). In a VAT-based system, correct classification determines not only the rate but the possibility of differentiated regimes or reduced rates provided for in the reform. Another critical point is the reconciliation between financial movement and declared revenue, since data crossing by the Federal Revenue is automated through EFD-Reinf, e-Financeira, and other ancillary obligations.
Checklist
FAQ
Does the tax reform end IRPJ and CSLL?
No. The Consumption Tax Reform (EC 132/2023) focuses on the replacement of taxes on goods and services. The Corporate Income Tax and the Social Contribution on Net Profit remain in force, levied on the profit and income of companies.
What changes for the service sector in 2026?
The service sector, which today mostly collects the municipal ISS, will start dealing with IBS and CBS. During the transition, there will be a coexistence between ISS and the new taxes. The final impact on the tax burden will depend on the standard rate to be defined and the capacity for the appropriation of input credits.
How will Import Tax work with CBS and IBS?
The Import Tax (II) continues to exist independently. CBS and IBS will also be levied on the import of goods and services, so that the total tax burden on the imported product follows the burden levied on a similar national product.
Next steps
We recommend reviewing the supplier register to identify which ones offer full CBS/IBS credit. Follow our technical analyses on the tax reform for updates on rates and specific regulations.
To move forward with the decision, continue through the sequence of topics: