Brazilian states have begun to adopt divergent interpretations regarding the inclusion of the Contribution on Goods and Services (CBS) and the Tax on Goods and Services (IBS) in the ICMS tax base during the transitional period of the tax reform, which enters a testing phase in 2026 and runs until 2032. Recent interpretative rulings (Soluções de Consulta) indicate differing positions: Pernambuco believes that CBS and IBS should already be included in the ICMS base; the Federal District argues that there is no legal basis for such inclusion; and São Paulo holds that the inclusion will only be possible starting in 2027, when the new taxes are effectively enforced.

This divergence has created legal uncertainty and may lead to litigation, as the interpretation directly impacts companies’ tax burden and price formation. A bill is currently under discussion in Congress aiming to expressly exclude CBS and IBS from the tax bases of ICMS, ISS, and IPI, in an effort to standardize treatment nationwide.

If no uniform interpretation is established, administrative and judicial disputes are likely to increase in the coming years.

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https://valor.globo.com/legislacao/noticia/2025/11/28/estados-divergem-sobre-inclusao-da-cbs-e-do-ibs-no-calculo-do-icms.ghtml