Tax reform in manufacturing: what changes in credits and pricing from 2027

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What changes

The reform replaces PIS, Cofins, ICMS and ISS with two consumption taxes: the federal CBS and the IBS, shared by states and municipalities. For manufacturers, the most relevant change is not the rate but how credit is generated along the supply chain.

Under the current model, many companies live with restricted credits, different regimes per tax and residual tax built into cost. Under the new model, the general rule is broad credit on what was actually paid at the previous stage.

The timeline

• 2026Test year, with token rates shown on tax invoices.
• 2027CBS replaces PIS and Cofins.
• 2029–2032Gradual phase-down of ICMS and ISS, with a proportional increase in IBS.
• 2033ICMS and ISS are abolished and the new model is fully in force.

Credit and suppliers

Because credit now depends on the tax actually paid by the supplier, choosing a supplier is no longer just a price decision. Two suppliers with the same invoice value can generate different credits for the buyer.

The question is no longer how much the input costs, but how much it costs after the credit.

Pricing and contracts

Long-term supply contracts signed today will run through the transition. Price adjustment clauses that ignore the change in taxes can leave margins exposed for years.

What to decide now

• Map the effective tax burden of each product line under the current and the new model.
• Review the supplier chain from a credit perspective.
• Review tax and price adjustment clauses in contracts running past 2027.