Brazil’s upcoming tax reform will introduce a split payment mechanism that separates tax collection at the moment of payment, but microempresas will not be able to use it in 2027, according to Folha de S.Paulo. The split payment, created by the dual VAT reform that establishes the CBS (Contribuição sobre Bens e Serviços) and the IBS (Imposto sobre Bens e Serviços), will be optional in 2027 and available only when both parties in a transaction are taxed under the lucro real or lucro presumido regimes—or have opted into the hybrid Simples Nacional.
What is split payment
Split payment diverts tax amounts directly to government accounts at the point of sale, rather than letting the seller retain the full payment and later remit taxes. Advocates say it reduces tax evasion and improves cash flow for businesses by granting immediate tax credits on purchases.
Who can use it in 2027
According to Cristiane Coelho, president of Fin (Confederação Nacional das Instituições Financeiras), speaking at an event hosted by Fiesp in partnership with the São Paulo State Court of Accounts and the State Public Prosecutor’s Office, the tool will not be usable in transactions involving individual consumers or companies fully enrolled in the Simples Nacional. Only businesses taxed under the regular profit regimes, or those that choose the hybrid Simples option—which lets taxpayers pay the new taxes outside the standard monthly voucher—will be able to employ split payment in 2027.
Impact on public cash flow
Luis Felipe Vidal Arellano, municipal finance secretary of São Paulo, warned that the reform will create a temporary cash‑flow strain for municipalities equivalent to the city’s payroll, because tax collected on business‑to‑business transactions will be held by the IBS management committee before being returned as credits. He advised public managers to build liquidity buffers, noting that the amount could reach several billion reais.
Diverging views
Former tax reform secretary Bernard Appy disputed the cash‑flow impact, arguing that the CBS rate will be calibrated so that revenue from consumer sales matches what is collected today through the ISS (municipal service tax), negating an automatic fiscal gap.
Background
The dual VAT will replace a mosaic of federal, state and municipal taxes, including PIS/Cofins, ICMS and ISS, with two valves: the CBS goes to the federal revenue service, while the IBS is managed by a committee representing states and municipalities. The split payment is one of the tools designed to improve compliance under the new system.
Single‑source reporting
All facts in this article are based on reporting from Folha de S.Paulo; no additional sources were consulted.