Split Payment in Brazil: predictable implementation by 2027 with a B2B focus

Paulo Zirnberger, CEO of Omnitax, a company specialized in tax intelligence

The Brazilian tax landscape is about to undergo a significant transformation with the introduction of Split Payment, an innovative strategy now scheduled to take effect in 2027. The change will initially focus on business-to-business (B2B) transactions and is expected to make tax collection more efficient, real-time, and less susceptible to tax evasion. However, it also carries implications, which led the government to opt for a gradual implementation.

The Split Payment concept refers to the division of a transaction payment into two parts: one part intended for the seller and another automatically directed to the government as taxes. Thus, at the moment of the transaction, a percentage of the total amount is withheld for the payment of due taxes, simplifying the tax collection process. The adoption of this system remains a major uncertainty for companies and tax administrations.

The main reasons for scheduling its implementation from 2027 include technological development and market preparation. The gradual introduction allows companies, financial institutions, and technology providers to adequately prepare for the transition. This is essential to ensure all participants are ready to operate within the new system and understand its functionalities. There is also the initial voluntary phase. That is, initially, companies will have the option to adopt Split Payment. This voluntary adoption phase offers the necessary flexibility for organizations to test the new system, adjust their internal processes, and understand the tax implications without the pressure of immediate mandatory compliance.

The Brazilian government recognizes that market readiness is a critical factor for the success of Split Payment. The first phase will be an opportunity for a sufficient number of companies to become familiar with the process. The mandatory adoption for business-to-consumer (B2C) transactions will be considered based on the system's evolution and the participation of B2B companies. Furthermore, the gradual introduction of the system is a strategy to minimize the risks associated with an abrupt transition. A simultaneous implementation for all transactions could result in operational and legal complications, in addition to generating confusion among users.

The perspective, for example, is that this change in the tax landscape will reduce tax evasion. With the automatic withholding of taxes, tax evasion can be reduced, offering the government better revenue collection and greater control over tax revenues. This change also promises to increase transparency in commercial transactions, as due taxes are calculated and withheld at the time of payment, and it should decrease the administrative burden that companies face when managing taxes, as the process will be automated.

This is where tax intelligence comes in, a tool that can play a fundamental role in the implementation and optimization of the Split Payment system in Brazil, especially with the focus on B2B transactions. Whether through Real-Time Data Analysis, which helps companies monitor their transactions and tax obligations, or through Process Automation, reducing the administrative burden on companies, especially in the implementation of Split Payment. That is, using artificial intelligence and machine learning to improve the security of tax data and ensure compliance with tax legislation.

Tax intelligence can also facilitate the modeling of various scenarios, enabling companies to simulate different taxation situations under the new system. This helps managers understand the financial and operational impacts of Split Payment on their operations and better plan their tax strategies, as well as tax intelligence systems that facilitate the generation of detailed reports and tax audits. With Split Payment, transparency in transactions will be crucial, and automated reports can provide valuable insights into tax compliance and financial performance, helping companies prepare for audits.
The fact is that we have gained more time until 2027, but Split Payment is an irreversible path, and tax intelligence can be a vital ally for companies in Brazil, helping to mitigate risks, ensure compliance, and maximize efficiency. The implementation of Split Payment scheduled for 2027 represents a significant step towards the modernization of the Brazilian tax system, especially regarding B2B transactions. The gradual approach, which prioritizes market preparation and offers an initial voluntary phase, reveals a prudent strategy in a complex economic environment. With the acceptance and adaptation to the new system, Brazil could be at the forefront of more efficient and transparent tax practices, which may benefit both the government and companies in the long term.