Brazil’s Tax Reform Committee and Digital Platforms Reach Agreement on E-Invoicing

One of the main challenges arising from Brazil’s tax reform during its transition period has been highlighted by digital payment and settlement platforms, which have raised concerns about the operational difficulties and higher costs associated with issuing tax documents for every transaction. To address the issue, the Management Committee for the Tax on Goods and Services (CGIBS), the Federal Revenue Service (Receita Federal) and the platforms themselves have reached an agreement on the use of a technological tool that will allow digital platforms to transmit essential information to tax authorities for the issuance of electronic service invoices (NFS-e).

The tool will enable data to be submitted in batches, reducing the time and human resources required for companies with high transaction volumes to meet their tax obligations. Known as the Consumer Transactions Report (Relatório de Operações de Consumo, or ReOps), the tool will undergo an implementation phase during which authorities and participating platforms will assess which information must be submitted and how cancellations, errors and omissions will be handled. These rules will be formalized through a technical standard, whose publication is expected in October. Implementation studies are being closely monitored by the Federal Revenue Service, digital platforms and the CGIBS.

The agreement marks progress in discussions between the federal government, states, municipalities and businesses to adapt the sector to the requirements of Brazil’s tax reform, which is scheduled to begin implementation in January 2027. At the center of these negotiations is the Management Committee for the Tax on Goods and Services (IBS), established under the tax reform and expected to play a key role in the operation of Brazil’s dual VAT system. This article examines the IBS Management Committee, including its responsibilities, composition, and the expectations and challenges surrounding its operations.

What Is the IBS Management Committee?

The Management Committee for the Tax on Goods and Services (Comitê Gestor do Imposto sobre Bens e Serviços, or CG-IBS) was established by Constitutional Amendment No. 132/2023, which introduced Brazil’s tax reform, and further defined by Complementary Law No. 214/2025 and Complementary Law No. 227/2026, which established its structure and governance framework.

Under the Constitution, the committee is a public entity operating under a special legal regime, with technical, administrative, budgetary and financial independence. It is responsible for coordinating, administering and regulating the IBS, which replaces the state-level ICMS and municipal ISS taxes under the tax reform.

What Are the Responsibilities of the IBS Management Committee?

Understanding the functions of the IBS Management Committee requires examining Article 156 of the Brazilian Constitution and Article 2 of Complementary Law No. 227/2026. These provisions establish the committee’s responsibilities and its relationship with Brazil’s federal entities.

Its main responsibilities include:

• Issuing a unified set of regulations and standardizing the interpretation of the IBS.
• Collecting, offsetting, withholding and distributing IBS revenue.
• Adjudicating administrative tax disputes.
• Harmonizing rules with the federal government on matters common to the IBS and the Contribution on Goods and Services (CBS).
• Sharing tax information with the Federal Revenue Service and the National Treasury Attorney General’s Office (PGFN).
• Coordinating tax audits, assessments and collection activities carried out by federal entities.

Tax audits, assessments, collection and judicial representation related to the IBS will remain the responsibility of the tax authorities and legal offices of the respective federal entities. These activities may be delegated or shared. The committee’s role is to coordinate them, including tax collection and the registration of outstanding tax liabilities as public debt.

How Will the IBS Management Committee Be Composed?

The CG-IBS is designed around the principle of federal balance, with representation from Brazil’s states, the Federal District and municipalities.

Its Superior Council will consist of 27 state-level representatives, with one representative from each of Brazil’s 26 states and the Federal District, as well as 27 municipal representatives. The municipal representatives will be selected proportionally, with 13 representing the most populous municipalities and 14 representing less populous municipalities.

What Will the Committee Change for Taxpayers in Practice?

In practice, the most visible changes for taxpayers are expected to involve reduced bureaucracy and fewer ancillary tax obligations. The stated goal is to simplify the calculation and payment of the new tax.

Currently, companies must navigate multiple payment forms, declarations and regulations for ICMS and ISS. Under the tax reform, the management committee is expected to provide a more unified framework for tax administration, integrating collection procedures into a simplified payment process.

Under this new process, a company calculates the IBS it owes and pays the tax through a single payment document to the appropriate collection system. The committee is then responsible for managing tax credits and distributing revenue among the federal entities according to the destination principle.

The committee will also be responsible for maintaining and updating information and consultation systems that taxpayers can easily access, with the aim of improving transparency and making tax rules easier to understand.

The centralization introduced by the committee is intended to eliminate operational complexity arising from the multiple state and municipal jurisdictions governing ICMS and ISS. The CG-IBS is therefore expected to establish a more efficient, straightforward and integrated administrative model for taxpayers.

How Will IBS Revenue Collection Work?

Unlike the current state and municipal tax collection model, the IBS system will centralize revenue collection through the management committee, which will subsequently distribute the proceeds among states and municipalities. Distribution will follow the destination principle, meaning that revenue will be allocated according to where transactions are consumed.

The CG-IBS will calculate each federal entity’s share at intervals determined by the committee itself. These intervals may range from a minimum of one business day to a maximum corresponding to the tax assessment period. Transfers must be completed within three business days after the end of each cycle.

Before making the transfers, the committee will also deduct amounts earmarked for specific purposes, including its own funding allocation and sums intended to compensate or refund ICMS balances owed to creditors.

Under the split-payment mechanism, tax revenue will be directed to the CG-IBS, which will be responsible for reconciling these amounts with each taxpayer’s tax liabilities and credits. Under the simplified procedure, the committee must refund the supplier within three business days after verification any amounts collected but not used.

Another important aspect of the committee’s work will be the processing of tax credit offsets and refunds. These mechanisms will directly affect sectors that tend to accumulate substantial tax credits, including exporters, agribusiness, logistics and manufacturing.

The Positive and Negative Implications of the IBS Management Committee

The IBS Management Committee is intended to modernize Brazil’s tax system and improve its efficiency. The expected benefits include eliminating regulatory fragmentation between states and municipalities, simplifying tax administration through a unified payment document, improving the management and offsetting of tax credits, and establishing a unified administrative tax dispute process.

Despite these expectations, the committee will face challenges in the coming years.

As an unprecedented intergovernmental body in Brazil, it raises questions about the risk of decision-making paralysis during political deadlocks between state and municipal representatives. Some experts have also raised concerns that the IBS Management Committee could become a kind of “fourth branch of government” because the breadth of its administrative and regulatory powers could encroach on the autonomy of states and municipalities. This could reduce them to passive managers of revenue, potentially undermining the constitutional balance between federal entities and creating tensions within the federation.

The potential loss of state and municipal autonomy is another concern. Governors and mayors will have less freedom to grant tax incentives or independently change tax administration to attract investment. Tax assessment and enforcement rules will increasingly depend on decisions made collectively by the committee.

Another challenge will be the complexity of the transition period. Companies will need to adapt their software and enterprise resource planning (ERP) systems to the committee’s centralized data infrastructure while temporarily operating under both legacy rules and the new framework.

Brazil’s tax reform provides for a transition period for taxpayers extending at least through 2032. The transition between federal entities will last considerably longer, with transitional arrangements for revenue distribution expected to remain in place through at least 2077.