Complementary Law (“LC”) No. 214/2025 establishes the Social Contribution on Goods and Services (“CBS”), as well as the key elements of the transition from the current tax system and the new consumption-based tax model introduced by Constitutional Amendment No. 132/2023, commonly known as the Tax Reform.
One of the most debated aspects concerns the PIS and COFINS contributions under the new system, as they will be replaced by the CBS in 2027.
In this context, a relevant topic for taxpayers is the treatment of PIS and COFINS credit balances, especially regarding how they may be used under the new tax regime.
Given the legal and temporal limitations and the changes in credit entitlement compared to the current system, taxpayers who typically have significant credit balances will need to carefully plan how to monetize any remaining PIS and COFINS credits from 2027 onward. It is important that such planning also considers the initial CBS credit rules applicable during the transition.
In general, LC No. 214/2025 provides that PIS and COFINS credits —including presumed credits — will remain valid and may be offset against the CBS due, provided they are properly recorded according to the applicable rules until their extinction and comply with the statute of limitations.
Furthermore, the law allows for the reimbursement in cash or offsetting of these credits against other federal taxes, subject to the conditions and limits in force at the time of the request or filing, and in accordance with the rules established by the Brazilian Federal Revenue Service (“RFB”). The RFB may also establish additional requirements.
LC No. 214/2025 also addresses more specific credit scenarios. It ensures that PIS and COFINS credits being appropriated in installments at the time of their extinction – such as those related to depreciation, amortization, or monthly quotas—may continue to be appropriated under the CBS regime, as presumed credits. The transition preserves the original appropriation conditions, such as the timing criteria and the rate applicable when the credit was established.
This rule covers credits linked to fixed and intangible assets, buildings incorporated into the company’s assets, and imported goods whose credit is appropriated gradually.
Also eligible are credits not yet appropriated but awaiting the fulfillment of legal requirements to start the utilization at the time of the transition, such as pre-operational costs.
However, in this case, taxpayers should be cautious about the sale of such assets, as selling them before full appropriation of credits may result in the loss of the remaining credit portions.
Recognizing that the transition may also involve returns or cancellations of sales made under the previous regime, the legislation ensures credit rights in these cases to avoid losses due to the system change.
Thus, starting January 1, 2027, CBS credits will be allowed for PIS and COFINS amounts levied on goods sold before that date but returned or canceled afterward. These credits, however, may only be used to offset the CBS itself and cannot be reimbursed in cash or used to offset other federal taxes.
Additionally, if by December 31, 2026, the taxpayer was under the cumulative tax regime or the tax substitution regime, they may recognize presumed CBS credits on inventory of tangible goods held as of January 1, 2027. This applies to goods for which no credits were claimed due to the nature of those regimes, provided the taxpayer switches to the regular CBS regime in 2027.
Covered cases include pharmaceutical, perfumery, cosmetic, and personal hygiene products subject to taxation at the manufacturer or importer level; automotive goods under special regimes involving monophase or substituted taxation; machinery, equipment, and vehicles where the manufacturer or importer acted as a tax substitute; and tobacco products traditionally subject to special advance tax collection regimes.
Besides that, presumed CBS credits may be recognized on the portion of inventory whose acquisition was subject to partial credit restrictions under the previous system.
This particularly affects taxpayers under the non-cumulative PIS and COFINS regime but with mixed revenues—some taxable, some under the cumulative regime—requiring apportionment for proportional crediting.
The crediting of inventory is subject to certain conditions. Only new tangible goods, purchased from Brazilian corporate entities or imported, and intended for resale or use in manufacturing goods for sale or in services to third parties, are eligible. No provision is made for intangible goods or services held in inventory.
Explicitly excluded are goods purchased with zero rates, exemptions, suspensions, or non-taxation, as well as goods for personal use or consumption, real estate, and fixed assets.
In the case of contracts with public utility concessionaires, the law extends this exclusion to goods not classified as fixed assets under the relevant accounting standards.
The valuation and verification of inventory eligible for credit will be regulated by an act of the Federal Executive Branch, which may include inventory assessments or other methods.
For domestically acquired goods, the credit will be calculated by applying a 9.25% rate to the inventory value. For imports, the credit amount will correspond to the PIS/COFINS-Import tax effectively paid, excluding the additional rate provided in specific legislation.
These credits must be calculated and recorded by June 30, 2027, and may be used in 12 equal and successive monthly installments starting from the following month. They may only be used to offset CBS and are not eligible for cash reimbursement or offsetting against other federal taxes. The 12-month timeframe requires strategic planning to maximize efficiency.
It is worth noting that PIS and COFINS credits from the transitional system will have priority over other CBS credits, ensuring faster liquidity of legacy balances. Lastly, as a general rule, the right to use credits will expire within five years from the end of the reporting period in which the credit was recorded.
We emphasize that the Executive Branch is expected to issue further guidance and regulations. As the extinction of PIS and COFINS and the start of CBS collection approaches, the lack of detailed regulation raises legitimate concerns among taxpayers regarding the feasibility of a secure and balanced transition between regimes.
Moreover, even after the necessary regulations are issued, the effectiveness of the rules will depend on diligent management by taxpayers, especially concerning bookkeeping, documentation, and compliance with legal deadlines.
Proper planning is essential to ensure a smoother and more cost-effective transition to the new tax system.
