The enactment of Constitutional Amendment No. 132/2023 marks the beginning of tax reform in Brazil. The new consumption tax regime, scheduled to be implemented between 2026 and 2033, will affect all economic sectors—especially retail, due to its strategic position in the production chain and direct relationship with the end consumer.
In this bulletin, our firm analyzes the main effects of the Tax Reform on the retail sector and provides guidance on measures that can be adopted now to mitigate risks and seize the opportunities created by the changes.
WHAT IS CHANGING
The Reform provides for the end of the current consumption taxes (PIS, Cofins, IPI, ICMS, and ISS) and their replacement with two new taxes:
- CBS (Contribution on Goods and Services) – under federal jurisdiction;
- IBS (Tax on Goods and Services) – under state and municipal jurisdiction.
Additionally, a Selective Tax will be created, targeting products considered harmful to health or the environment. The collection of the new taxes will follow the destination principle, meaning they will be due in the location where the good or service is consumed—significantly changing the pricing logic and interstate logistics.
LEGAL IMPACTS ON THE RETAIL SECTOR
The transition from the current tax system to the new model established by the Reform will not be limited to accounting or operational adjustments. The changes require legal revisions, particularly in contractual instruments and the tax practices adopted by retail companies.
1. Tax Contractual Clauses
Contracts with suppliers, distributors, service providers, and commercial partners that include clauses related to tax transfer, tax substitution regime, rates fixed by prior legislation, or ancillary obligations must be re-evaluated under the new regime.
It will be necessary to revise clauses such as:
- Rules for tax pass-through along the chain;
- Joint or subsidiary liability for taxes;
- Provisions for revisions due to legislative changes; and/or
- Pricing with or without itemized taxes.
Neglecting contracts can result in litigation and unforeseen liabilities, causing business losses.
2. Corporate and Tax Reorganization
The new system may alter the cost-effectiveness of corporate structures currently adopted by retail companies (such as branches in specific states to take advantage of tax benefits). It will be necessary to review corporate structures and holdings to avoid legal inefficiencies under the new regime.
3. Tax Litigation and Transition
During the transition period (2026 to 2033), conflicts of jurisdiction between federal entities may arise, in addition to differing interpretations on the scope of the new legislation. The retail sector—especially those operating in multiple locations—must be prepared to act preventively and, if necessary, litigate to safeguard its rights.
HOW TO PROCEED
It is important to seek legal guidance for a specific case analysis and the possible adoption of special measures to protect and safeguard rights.
Contact our office and schedule a consultation. We are available to assist you with the best legal advice.
Franco Advogados
