Brazil operates what is widely regarded as one of the most complex indirect tax systems in the world. Rather than a single national value-added tax (VAT), Brazil uses a combination of federal, state, and municipal taxes, including:
- ICMS: State tax on goods and some services.
- IPI: Federal tax on industrialised products.
- ISS: Municipal tax on services.
Each tax is governed by different rules, authorities, and rates, often leading to overlapping compliance obligations.
Businesses engaged in taxable activities — including manufacturing, importing, distributing, or providing services — must register with the relevant tax authorities, issue compliant electronic invoices (NF-e or NFS-e), charge the correct tax, and meet monthly or real-time reporting requirements.
Brazil is currently undergoing a sweeping tax reform aimed at simplifying this structure by replacing several existing taxes with a dual VAT-style system:
- CBS (Contribuição sobre Bens e Serviços) at the federal level
- IBS (Imposto sobre Bens e Serviços) at the state and municipal levels
The new VAT system is being phased in between 2026 and 2033.
