Understanding the Brazil Tax Reform and its Impact on the Tax Structure

The government of Brazil has introduced a tax model to establish new taxes within a specified transition period. The new tax model has introduced two new taxes which are State and City Level Tax - Goods and Services called IBS and Federal Contribution - Goods and Services called CBS. These are non-cumulative taxes that are collected nation-wide in a centralized form. These taxes are levied on the basis of the destination location of the goods and services, and are therefore calculated on the basis of the Ship To location setup. These taxes will replace the current indirect taxes, including PIS/COFINS, ICMS, ISS, and IPI, gradually over the transition period and completely by the end of it.