The Brazilian Tax Reform promised neutrality, simplicity, and legal certainty, but a gap in Complementary Law No. 214/2025 may give rise to the first major dispute of the post-reform era. The statute prevents IBS and CBS from being included in their own tax bases, but does not expressly prohibit their inclusion in the ICMS (Brazilian state VAT) and ISS (Tax on Services) tax bases during the transition period. State tax rulings have already indicated that such inclusion may occur as of 2027, when the new taxes begin to be effectively collected. The absence of a clear rule threatens to recreate, indirectly, the cascading taxation that the reform sought to eliminate. Legislative action to fill this gap is essential to preserve the legal certainty promised by the reform.
Authors:
Anna Flávia de Azevedo Izelli Greco, partner (annaizelli@felsberg.com.br)
Rodrigo Prado Gonçalves, partner (rodrigoprado@felsberg.com.br)
Camila Costa Marques de Souza, associate (camilasouza@felsberg.com.br)