Short answer. Brazil’s consumption-tax reform does not just change which taxes apply — it changes how they are collected. Under split payment, the IBS and CBS built into a sale are peeled off at the moment the payment settles and routed straight to the tax authorities, instead of the seller receiving the full amount and remitting the tax later. It is one of the most consequential — and least discussed — parts of the reform, because it hits cash flow and working capital, not just tax rates. It is being phased in across the 2026–2033 transition.
What split payment is
Today, when a Brazilian company sells something, it receives the full price (tax included) and pays the tax to the government later, on the due date. In between, the company holds the tax money — useful float.
Split payment ends that. The tax portion of a transaction is segregated automatically at financial settlement — by the payment infrastructure (acquirers, banks, arrangement providers) — and sent to the IBS/CBS collection system. The seller receives only the net-of-tax amount. [Source: EC 132/2023; Lei Complementar 214/2025 — Planalto]
A simple example on a R$100 sale carrying R$18 of IBS/CBS:
- Today: the seller receives R$100, then remits R$18 to the government by the deadline.
- With split payment: at settlement the R$18 goes to the tax authorities and the seller receives R$82.
Why it matters more than the rate
For a foreign group operating in Brazil, the headline reform question is usually “what is the rate?” Split payment is arguably a bigger operational change:
- Working capital. The float on collected tax disappears. Companies that quietly relied on holding tax between collection and payment lose it.
- Reconciliation. Every settlement is now split, so receivables, tax ledgers and the IBS/CBS credit system must reconcile transaction by transaction.
- Fraud reduction. The mechanism is designed to cut evasion in the non-cumulative chain — a structural reason Brazil is adopting it at scale.
Because IBS/CBS are non-cumulative (tax paid upstream is a credit downstream), split payment is meant to work alongside near-real-time crediting — see Is There VAT in Brazil? IBS and CBS Explained.
The timeline
Split payment arrives gradually, tracking the broader IBS/CBS transition:
- 2026 — a test phase, focused on transactions with end consumers on the main electronic payment rails; reporting and system readiness rather than real collection.
- 2027 — CBS begins to be charged; split payment starts, initially on a voluntary/limited basis for business-to-business flows.
- 2029 onward — as IBS ramps and ICMS/ISS phase down, split payment becomes increasingly the default across the chain, through to full implementation by 2033.
The exact mechanics — including “smart” per-transaction models versus simplified variants — are still being detailed in infralegal regulation. Treat specific procedures as a moving target and confirm the current rules for your payment flows. [Source: Lei Complementar 214/2025 — Planalto; CGIBS / Receita Federal]
What foreign companies should prepare
- Map your payment rails. Split payment runs through acquirers, banks and payment-arrangement providers — your PSP and banking setup becomes part of your tax compliance — and for foreign digital suppliers, the payment system is also the backstop that collects CBS/IBS if you do not register.
- Model the cash-flow hit. Rebuild working-capital projections assuming the tax portion never lands in your account. This is the single most underestimated effect.
- Fix ERP and invoicing first. The split relies on correct IBS/CBS being stated on each electronic invoice; the 2026 invoice-field obligations are the foundation.
- Protect your credits. In a non-cumulative system, your input credits are cash — make sure your systems capture and reconcile them as settlement is split.
How it fits the wider reform
Split payment is the collection engine of the new dual VAT. It sits beside the other moving parts: the IBS/CBS structure and rates, the Selective Tax on harmful goods, and — on imports — the way IBS/CBS gradually replace part of the import-tax stack. It does not change income taxation (IRPJ/CSLL), which runs on a separate track.
Practical takeaway
For a foreign company operating or selling in Brazil:
- Do not treat split payment as an IT footnote — it changes when cash reaches you.
- Get IBS/CBS right on the invoice — the split depends on it.
- Re-forecast working capital for the transition years.
- Confirm the current mechanics for your sector and payment flows before each transition milestone — the rules are still being written.
FAQ
What is split payment in Brazil’s tax reform? A collection mechanism where the IBS and CBS on a sale are automatically segregated at the moment of payment settlement and sent to the tax authorities, so the seller receives only the net-of-tax amount.
When does split payment start in Brazil? It phases in across the 2026–2033 transition: a test phase in 2026, a limited/voluntary start for B2B around 2027 as CBS begins, and broad adoption from 2029 onward.
What is the legal basis for split payment? Constitutional Amendment 132/2023 created the reform; Lei Complementar 214/2025 regulates how the segregated payment works in practice.
How does split payment affect cash flow? The tax portion of each sale no longer passes through the seller’s account, removing the float companies used to hold between collecting and remitting tax — a direct working-capital impact.
Does split payment apply to income tax (IRPJ/CSLL)? No. Split payment is a collection mechanism for the consumption taxes IBS and CBS; corporate income taxation runs on a separate track.
📚 Related: Is There VAT in Brazil? IBS and CBS Explained and IBS and CBS in 2026: What Foreign Companies Should Prepare.
Sources
Official sources reviewed for this brief: the constitutional reform (Emenda Constitucional 132/2023 — Planalto) and the complementary law that regulates the IBS/CBS collection, including split payment (Lei Complementar 214/2025 — Planalto), read together with the implementation guidance of the Comitê Gestor do IBS (CGIBS) and Receita Federal.