An old proverb says that there is a great distance between the cup and the lips. The image seems made for Brazilian Tax Reform: between its implementation and the promise of greater competitiveness, there is still a long journey ahead. And part of it will be traveled under a variable that Keynes placed at the center of economic decisions: uncertainty.

In 2026, it will have been 90 years since the publication of John Maynard Keynes’s The General Theory of Employment, Interest and Money. One of his most enduring contributions was to demonstrate the importance of expectations in investment decisions. Businesses invest today based on expected returns in a future they cannot know with precision. Confidence in tomorrow, therefore, also influences decisions made in the present.

Tax Reform promises to simplify Brazil’s tax system, but its implementation offers a concrete example of this problem. The effective tax burden that will emerge from the new system will still depend on calibration, and the interpretation of many of the new rules will be developed over time. For those who need to make investment decisions today that will produce results over several years, these uncertainties carry an economic cost.

Douglass North, the 1993 Nobel Prize winner in Economics, showed decades later that institutions matter because they establish the rules of the game and structure the incentives that guide economic decisions. The more predictable these rules and their application, the lower the transaction costs and the better the conditions for long-term decisions. With 2027 only a few months away, the reference rate for the CBS, which will replace PIS and Cofins, has yet to be defined. For companies, the question is: how do you price?

In Law, Humberto Ávila approaches the issue from another angle. In Theory of Legal Certainty, he associates legal certainty with three dimensions that are particularly useful for this debate: knowability, reliability and calculability. An agent needs to know the rules, trust in some degree of stability and be able to reasonably anticipate the legal consequences of their choices. But the consequences are not only legal; they are also economic.

The connection is direct. Investments depend on projections of cash flow, costs and returns. The lower the ability to anticipate the tax treatment of a transaction, the greater the risk premium that tends to be required. Legal uncertainty thus becomes a kind of invisible tax on investment.

There is an important distinction. Uncertainty is inherent to any transition of this magnitude. Legal uncertainty is not. The new tax litigation framework, the harmonization of interpretations involving IBS and CBS, the recognition of tax credits, the burden of proof and even the use of artificial intelligence in administrative proceedings will determine an important part of the economic environment that emerges from the reform.

For years, companies will have to operate under two systems. The transition will require technical capacity, specialized advice and the adaptation of processes, systems and business decisions. Paradoxically, we may experience greater complexity precisely on the path toward simplification. It is during this transition, and through the costs it imposes, that the quality of institutions will be tested.

Harmonizing interpretations, consolidating precedents and ensuring consistency in decision-making are therefore not issues restricted to Tax Law. For economists, they affect expectations, investment and the allocation of resources; for policymakers, they concern institutional quality and the credibility of the reform itself; and, for those making business decisions, they determine how much uncertainty can be converted into calculable risk. Legal certainty, in this sense, is also economic policy and a factor of competitiveness.

The success of Tax Reform will depend not only on the design of the new rules, but also on how they are implemented, interpreted and applied over time. Tax rates, credits, litigation and consistency in decision-making form a single equation: confidence in the new system. Capital knows how to deal with risks. Faced with rules it does not understand or whose consequences it cannot reasonably anticipate, it may delay decisions. But capital also moves. And while it waits, other destinations for investment may become more attractive. Shortening the distance between the cup and the lips, therefore, means more than completing the tax transition: it means transforming the promise of simplification into confidence, investment and competitiveness.