Business · Economy · 5 hrs ago
Brazil tax reform could delay companies’ tax credits by up to 63 days
Brazil’s consumption tax reform is due to take effect on January 1, 2027.
Under the new system, a buyer can use a tax credit only after its supplier pays the tax.
A study of 65 business groups and 295,000 suppliers estimates that payment timing could delay credits by 33 days, or 63 if a supplier defaults.
The delay could tie up companies’ working capital, while taxes they cannot recover may become part of input costs and reach final prices.
Companies have until December 31, 2026, to adjust their business software, review contracts and coordinate their legal, tax, commercial and finance teams.
The CBS tax rate is still undecided; Brazil’s audit court is due to present a figure by October 30, and the Senate may change it by the end of the year.
A Roit study says Brazil’s tax reform could delay companies’ use of tax credits by 33 days when supplier and buyer billing schedules do not align, and by up to 63 days if a supplier defaults.
Under the new consumption-tax system, a buyer can use a credit only after the supplier pays the tax.
The study assessed 65 business groups and 295,000 suppliers, whose annual purchases total R$608.8 billion.
Roit estimates that R$16.35 billion in taxes paid at earlier stages of the supply chain could remain unrecovered as credits in a year.
The reform is due to take effect on January 1, 2027, and companies face a December 31, 2026 deadline to prepare systems and review contracts.
- Who
- Brazilian companies and their suppliers are affected. Roit conducted the study.
- What
- The reform could delay companies’ use of tax credits by 33 days, or up to 63 days if a supplier defaults.
- When
- The new system is due to take effect on January 1, 2027. Companies have until December 31, 2026 to prepare.
- Where
- Brazil.
- Why
- Buyers can use tax credits only after suppliers pay the tax, potentially tying buyers’ available funds to suppliers’ payment schedules.
This story does not have two clearly opposing sides.
Companies’ deadline to configure ERP systems, renegotiate contract terms and penalties, and coordinate relevant departments.
The consumption-tax reform is due to take effect.
- Potential delay
- 33 days when supplier and buyer billing schedules do not align; up to 63 days if a supplier defaults
- Study scope
- 65 business groups and 295,000 suppliers
- Annual purchases assessed
- R$608.8 billion
- Potential unrecovered tax credits
- R$16.35 billion in a year
- Reform start date
- January 1, 2027