Selective Tax, Split Payment, FX Accounts & FGTS Digital Updates

The Brazilian government is preparing to submit the proposed Selective Tax (Imposto Seletivo – IS) rates to Congress, aiming for the new tax to take effect on January 1, 2027.

The proposal is expected to be submitted through a provisional measure, together with the 2027 Annual Budget Bill (PLOA), at the end of August or in early September. The Selective Tax was created to discourage the consumption of goods and services considered harmful to health or the environment.

For products currently subject to the Industrialized Products Tax (IPI) — such as vehicles — the government intends to set Selective Tax rates at a level that broadly preserves the existing tax burden, aiming to avoid an immediate increase and reduce resistance from affected industries. For products not currently subject to IPI, such as mineral products, applicable rates are still being discussed and could reach up to 0.25%.

The implementation of Brazil's new split payment mechanism will not begin in January 2027 as initially anticipated, following discussions within the IBS Management Committee (CGIBS) in August 2026.

The postponement reflects the technical complexity of the mechanism and the additional time required for tax authorities, financial institutions, payment providers and companies to complete the necessary system integrations.

The legal and regulatory framework for split payment is already in place, and Receita Federal and CGIBS continue to develop the required technical infrastructure — an updated integration manual for the public split-payment platform was published in August 2026. Implementation is expected to be gradual, with authorities potentially restricting the initial phase to certain B2B transactions on an optional basis. A new effective date has not yet been formally established, but split payment has not been abandoned — it remains a key part of the new consumption tax architecture.

Another collection mechanism under the reform, Recolhimento pelo Adquirente (RAD), allows the purchaser to directly pay the tax associated with a transaction in certain circumstances. Its operational rules and timetable should also continue to be monitored.

The Central Bank of Brazil has published BCB Resolution No. 575, expanding the circumstances in which companies may maintain foreign currency deposit accounts in Brazil.

Dated June 18, 2026 and coming into force on October 1, 2026, the new regulation represents another step toward modernizing the rules applicable to financial transactions between Brazilian companies and entities abroad.

In practice, this may allow certain transactions to be carried out directly in foreign currency, without an intermediate conversion into Brazilian reais for each transfer. For accounts related to external credit or foreign direct investment, credits and debits must be exclusively linked to those transactions, and conversion into reais will still require a foreign exchange transaction. Access to these accounts remains linked to the existence of transactions duly registered with the Central Bank, so Brazilian companies belonging to foreign groups should keep their external credit and FDI registrations up to date.

Brazil continues to digitalize its payroll and labor compliance environment — since May 1, 2026, FGTS payments arising from labor claims must, in most cases, be made through FGTS Digital rather than the traditional SEFIP/GFIP process.

Employers were already required to report labor proceedings through eSocial, using event S-2500 – Labor Proceedings. Under the new process, this information is used to calculate the corresponding FGTS amounts, made available in FGTS Digital for payment, and the system allows companies to generate payment slips linked to the specific labor proceeding.

• Up to April 30, 2026 Previous SEFIP/GFIP procedures generally continue to apply
• From May 1, 2026 FGTS payments from labor court decisions or qualifying agreements must go through FGTS Digital

Although technical, the change has important practical consequences: the information contained in a court decision or settlement must be correctly reflected in eSocial before the FGTS liability can be properly generated and paid. Incorrect information regarding remuneration periods, calculation bases or employment relationships may lead to incorrect payments or inconsistencies between eSocial and FGTS Digital — increasing the importance of coordination between HR, payroll, accounting and legal teams.

On August 12, 2026, the Brazilian Federal Revenue Service and the IBS Management Committee introduced a new National Tax Compliance Program to support companies during the first year of the IBS/CBS transition.

Rather than focusing primarily on penalties, the authorities intend to prioritize guidance, monitoring and correction of inconsistencies during this initial phase — particularly relevant as companies adapt their ERP systems, electronic invoicing processes and tax parameters to the new IBS and CBS requirements.

• Detect Receita Federal and CGIBS identify inconsistencies — such as incorrect tax codes or missing fields — through electronic monitoring and data cross-checks
• Warn The company receives a communication pointing out the issue; this alone does not constitute the start of a formal tax inspection
• Correct The company has a 60-day legal period to regularize the inconsistency, generally preserving the benefits of voluntary self-correction

This should not be interpreted as a suspension of compliance obligations. Companies are still expected to adapt their systems, issue tax documents correctly and maintain adequate supporting documentation throughout the transition.