Government details fuel tax calculation, defining future CBS and IBS rates
The tax landscape for fuels in Brazil is beginning to take shape with the publication of a joint ordinance from the Ministry of Finance and the Steering Committee for the Tax on Goods and Services (IBS). The document establishes the methodology for determining the tax rates that will apply to these products, marking a significant step in the transition to the new tax system.
The new regulation details how the future Contribution on Goods and Services (CBS) will be calculated starting in 2027, as well as the IBS itself, which is scheduled to take effect in 2029. The goal is to ensure a planned and transparent transition with clear limits on the tax burden.
Methodology for CBS defined
For the CBS, the ordinance stipulates that the 2027 rate must not exceed the sum of the current direct and indirect tax burden. The direct burden will be based on the rates in effect between July 2025 and June 2026, updated with a 3% increase to reflect the 2027 inflation target.
The indirect burden, in turn, will consider the consumption volume of each fuel in 2025, adjusted by the variation in the IPCA index and a 3% addition.
The document details:
For the years following 2027, CBS rates will be set so as not to exceed the reference tax burdens addressed in Article 3, adjusted by the percentage variation of the PMPF between the base year and the 12 months prior to July of the year before that for which the rate is being set.
IBS phase-in and new calculation bases
In the case of the IBS, the implementation will be gradual. Initial rates starting in 2029 will be 10%, rising progressively until reaching 100% in 2033. This phased structure is intended to allow for market and consumer adaptation.
The methodology for calculating the direct IBS tax burden will account for the period from July 2027 to June 2028, with adjustments based on the IPCA and future inflation targets.
The indirect IBS burden will examine the impact of current ICMS and ISS taxes on the fuel supply chain, considering amounts not recovered as credits in 2027, also subject to inflation adjustments.
Impact and next steps
The publication of this ordinance represents a significant advancement in the regulation of tax reform, providing greater predictability regarding the future of fuel taxes. Clarity in the methodology is essential for companies and consumers to plan accordingly.
The details established in this document are expected to serve as a basis for future discussions and adjustments, ensuring a smooth and effective transition to the new tax system with a focus on sustainability and economic efficiency.
