TAX REFORM 2026: CHALLENGES AND PERSPECTIVES FOR SERVICE-PROVID

Abstract

This study analyzes the impacts of the Tax Reform introduced by Constitutional Amendment No. 132/2023 on service provider companies, focusing on the implementation of the Goods and Services Tax (IBS) and the Contribution on Goods and Services (CBS). The research aims to understand how the new consumption taxation system, based on the Dual Value Added Tax (VAT) model, may affect the tax burden, competitiveness, and economic sustainability of the service sector in Brazil. The study is justified by the economic relevance of the sector, which accounts for a significant share of the national Gross Domestic Product (GDP) and job creation, as well as by the legal uncertainty arising from the tax transition period and the lack of consolidated regulations and case law regarding the new system. The methodology adopted is qualitative, exploratory, bibliographic, and documentary, based on the analysis of tax law doctrine, constitutional and infra-constitutional legislation, case law, and technical studies produced by national and international institutions. The research examines the historical evolution of consumption taxation in Brazil, the structural problems of the previous tax system, and the main objectives of the Tax Reform. Subsequently, it analyzes the impacts of full non-cumulativity on service provider companies, especially considering the limitations on tax credits related to payroll expenses and the possible increase in the effective tax burden. The study also discusses the compatibility of the reform with constitutional tax principles, such as ability to pay, tax neutrality, equality, and non-cumulativity, in addition to examining compensatory mechanisms, including differentiated tax rates, specific tax regimes, and presumed tax credits. Furthermore, it addresses issues related to legal certainty, tax litigation, business competitiveness, and international experiences involving the implementation of VAT systems in other countries. The results indicate that, although the Tax Reform represents an important attempt to simplify the Brazilian tax system and align it with international standards of consumption taxation, there are concrete risks of increasing the tax burden on the service sector, especially in labor-intensive activities with limited capacity for tax credit recovery. It is concluded that the effectiveness of the new model will depend on infra-constitutional regulation, administrative and judicial interpretation of the tax credit system, and the adoption of mechanisms capable of preserving competitive balance, legal certainty, and tax justice.