CNPJ Reform, CBS Transition, Wage & Betting Tax Updates

Brazil's Federal Revenue Service has introduced continuous, automatic monitoring of taxpayers benefiting from federal tax incentives, exemptions and other forms of tax relief.

On July 1, 2026, the Federal Revenue published Normative Instruction No. 2,332/2026, establishing the procedures for monitoring taxpayers that use federal tax benefits. The new rules will come into force on September 1, 2026. From that date, companies will no longer be reviewed only when they apply for or obtain authorization to use a tax benefit — they will instead be subject to ongoing monitoring of their tax compliance and registration status.

If any irregularity is identified, the company will be notified and given 20 days to regularize the pending issues. If the deadline is not met, the company may have its authorization cancelled or may be prevented from continuing to use the relevant tax benefit.

Individuals who will be required to register with Brazil's CNPJ as a result of the tax reform have been granted additional time to comply.

The IBS Management Committee (CGIBS) and the Brazilian Federal Revenue Service have postponed the registration deadline, originally expected to apply by July 2026, to January 1, 2027. A simplified CNPJ registration system is currently being developed, expected to be fully automated, less bureaucratic and integrated with electronic tax document issuance platforms. Until it becomes available, individuals may continue using current tax identification mechanisms, including municipal and state registrations, the CPF and, where already applicable, CNPJ registration.

• Original Deadline — July 2026 Registration was initially expected to become mandatory
• Simplified System — November 2026 Automated tool integrated with electronic tax document platforms should become available
• New Deadline — January 1, 2027 Technical CNPJ becomes mandatory for covered individuals

Brazil's CNPJ registration is changing: since July 1, 2026, newly issued numbers may include both letters and numbers instead of being purely numeric.

According to the Federal Revenue Service, the change is necessary because existing numeric combinations are close to being exhausted. The CNPJ will keep its 14 characters, but the structure will change: the first eight characters (the company's root registration number) and the four characters identifying the establishment after the slash may now be alphanumeric. Only the two final check digits will remain strictly numeric.

The new format applies only to new registrations. Even so, existing companies should review and update internal systems — especially ERP, invoicing, tax, accounting and compliance tools — since many were originally designed to accept only numeric CNPJ fields.

As part of Brazil's ongoing tax reform, the new Social Contribution on Goods and Services (CBS) will come into full effect on January 1, 2027, replacing PIS/Pasep and Cofins.

CBS is designed to operate under a full non-cumulative VAT-like model: tax paid at previous stages of the supply chain will generally generate credits for the purchasing company, so taxation applies only to the value added at each stage — a significant change from the current PIS/Cofins system, where credit use is often restricted or disputed.

CBS will apply to transactions involving goods, services, rights and intangible assets. Its taxable basis will be the value of the transaction, and the tax will not be included in its own calculation basis — an "outside the tax base" mechanism intended to bring greater transparency to pricing. As a federal contribution, CBS will be administered by the Federal Revenue Service and will remain linked to financing Brazil's Social Security system under Article 195 of the Federal Constitution.

Brazil's tax reform is entering an important preparatory phase: in 2026, companies must begin adapting their tax documents to report CBS and IBS.

Although 2026 is a test and transition year, correct reporting of CBS and IBS in electronic tax documents is essential to maintain the temporary exemption from actual payment during the testing period and to avoid operational issues in future assessments. Regulations published in April 2026 detail how each transaction must be classified — including the applicable tax treatment, such as the standard rate, exemption, reduced rate or another specific category.

No penalties related to the adaptation process are expected during 2026; penalties should only apply from 2027 onward. If authorities identify that a taxpayer is not yet reporting CBS and IBS, the current approach is to guide the company toward regularization — and if a formal notification is issued, the taxpayer has 60 days to correct the information. Companies under the Simples Nacional regime are currently exempt and should only become required to comply from 2027, though they may choose to anticipate the adaptation.

The State of São Paulo has approved a new adjustment to its regional salary floor, while Rio de Janeiro's update remains under discussion.

Under Law No. 18,471/2026, published on May 27, 2026, the minimum salary floor in the State of São Paulo has been increased to BRL 1,874.36, effective as from June 1, 2026. It applies to a broad range of professional categories not covered by a specific minimum wage set by federal law, collective bargaining agreement or collective convention.

Brazil's regulated betting and online gaming industry is rapidly becoming one of the country's most significant new sources of tax revenue.

In the first four months of 2026, the sector doubled its revenue compared with the same period in 2025, while tax collection increased from R$2.2 billion to R$4.5 billion — bringing the sector close to the level of taxation generated by traditional high-tax industries such as tobacco and agriculture, each contributing around R$1 billion per month.

Since 2025, the Ministry of Finance has issued 85 licenses to betting companies, and 187 authorized websites are currently operating in Brazil. In 2025, approximately 25 million CPF holders placed bets. The World Cup is expected to further accelerate this trend, potentially generating between R$20 billion and R$25 billion in additional deposits — roughly US$3.8 billion to US$4.8 billion.

The market remains highly concentrated: ten brands account for 68.8% of the sector, with Greece's Betano currently leading. This concentration may favor larger operators with strong technology, compliance and marketing capacity, while creating barriers for smaller entrants.

Brazil has removed the federal import tax on international purchases valued at USD 50 or less, reversing a measure that had affected low-value cross-border e-commerce.

The change was introduced by President Luiz Inácio Lula da Silva through an executive order signed in May 2026. It eliminates the federal levy that had applied to small purchases made through international e-commerce platforms, including marketplaces such as Shein, Shopee, AliExpress and other foreign retailers — expected to reduce costs for Brazilian consumers, particularly for clothing, accessories, household items and other everyday products.

The measure was adopted less than five months before Brazil's presidential election and addresses a tax that had become unpopular among consumers. From a business perspective, the key issue is not political timing, but the practical impact on pricing, tax collection and competition in Brazil's fast-growing digital commerce market.