Complementary Law No. 227/2026 was published in the Official Gazette of the Union on January 14, 2026. Enacted as a result of Supplementary Bill (PLP) No. 108/2024, the statute regulates core pillars of the consumption tax reform established by Constitutional Amendment No. 132/2023.
The law governs three structural axes of the new system:
(i) the governance and functioning of the IBS Management Committee;
(ii) the tax administrative procedure applicable to the new tax; and
(iii) the general rules applicable to the Inheritance and Gift Tax (ITCMD) within the context of the new federal tax architecture.
- IBS Management Committee: intergovernmental governance
Complementary Law No. 227/2026 operationalizes the Management Committee of the Tax on Goods and Services (IBS), an intergovernmental body bringing together the States, the Federal District, and the Municipalities for the administration of the new tax.
The IBS will replace the ICMS and the ISS, consolidating into a single tax the currently fragmented taxation on consumption.
The Management Committee will be responsible for:
- IBS collection;
- tax assessment and enforcement;
- management of tax credits; and
- distribution of revenues to the federative entities, in accordance with constitutional and statutory criteria.
This is one of the most sensitive mechanisms of the reform, as it shifts the center of tax collection from the state and municipal levels to a nationally coordinated structure, while preserving the federative revenue-sharing model.
- IBS tax administrative procedure
Complementary Law No. 227 also establishes a specific tax administrative procedure for the IBS, creating a unified procedural framework for the new tax.
The model seeks to overcome the current fragmentation between:
- state-level procedures (ICMS), and
- municipal-level procedures (ISS),
by creating a standardized administrative jurisdiction with:
- defined rules of competence;
- procedural deadlines;
- guarantees of due process and full right of defense; and
- uniform adjudication criteria.
The stated objective is to enhance legal certainty, reduce litigation, and expedite the resolution of disputes under the new system.
- General rules on ITCMD
The complementary law also sets forth general rules on the Inheritance and Gift Tax (ITCMD), which are particularly relevant in situations involving the internationalization of assets.
The statute regulates:
- the taxable event;
- the tax base;
- taxing authority competence; and
- the place of tax collection,
with a focus on cases in which donors, heirs, or assets are located abroad—a matter that had previously given rise to significant judicial disputes and conflicts among States.
- Relevant presidential vetoes
Presidential assent was accompanied by targeted vetoes, especially with respect to provisions amending Complementary Law No. 214/2025 (the first phase of the reform’s regulation).
Among the provisions vetoed were:
- the expansion of the concept of unconditional discounts (Article 12, §3);
- the inclusion of non-monetary consideration in the transaction value (Article 12, §4, II);
- specific rules on refunds under the piped gas regime; and
- provisions amending the tax regime applicable to Football Joint-Stock Companies (SAF).
These vetoes indicate an effort by the Executive Branch to curb conceptual expansions that could increase the IBS tax base, thereby preserving closer adherence to the constitutional design of the reform.
- Practical impacts
With the entry into force of Complementary Law No. 227/2026, Brazil moves from the normative phase to the operational phase of the consumption tax reform.
The constitutional timeline provides for the start of IBS operationalization as of 2026, with a gradual transition until full implementation in 2033.
The effective creation of the Management Committee and of a dedicated tax administrative procedure marks the point of no return in the replacement of the ICMS and ISS by the IBS, requiring companies, holding structures, and economic groups to undertake a comprehensive review of their compliance frameworks, tax systems, credit structures, and tax planning strategies.