With the tax reform regulated this year and set to take effect in 2026, Brazil is about to enter a new tax era. One of the pillars of this transformation is the systematization of "split payment." But what does it mean, in practice, to split tax payments directly at the source, as provided by the legislation? And how does this relate to the much-debated non-cumulativity of taxes?
For tax expert Lucas Ribeiro, CEO of ROIT, a technology and consulting company leading the development of solutions for the Tax Reform, the moment requires uncovering and understanding "split payment." "After all, it is a model that can revolutionize corporate finance," he/she/they consider.
Split payment: the revolution in tax collection
The "split payment" is a mechanism that promises to bring more security and efficiency to the Brazilian tax system. Nele, the due tax is segregated at the time of payment and directly allocated to the tax authorities, reducing the risks of default and tax evasion. "The 'split payment' eliminates tax evasion but requires greater availability of working capital from companies," explains Ribeiro.
This model is already used in some European countries, such as Italy and Poland, where it has helped combat tax evasion and improve revenue collection, even though it operates in part of the transactions. In Brazil, its adoption is accompanied by technological and operational challenges, but it promises to change the game for companies and public administrations.
Non-cumulativity: the principle that underpins Brazilian VAT
The non-cumulative nature of taxes, provided by the tax reform, guarantees that the tax is only levied on the added value at each stage of the production chain. With the creation, through the reform, of the Dual Value Added Tax (VAT) (which integrates two taxes, the CBS, Contribution on Goods and Services, and the IBS, Tax on Goods and Services), companies will be able to offset credits generated on purchases against sales debits, avoiding cascading effects and current cumulativity.
The challenge lies in the practical application of this principle, evaluates Ribeiro. "Non-cumulativity seems simple, but its implementation requires the basics: purchasing everything with an invoice and recording them correctly." It will be essential to undergo a significant change in culture, processes, and systems," he emphasizes.
The tax specialist lists some points that companies will need to master to better take advantage of the achievements of the tax reform:
- Tax process automationCompanies that invest in technology to automate the entire process of tax bookkeeping and payments will get ahead.
- Strategic management of creditsKnowing how to calculate and use credits efficiently will be essential to maximize profit margins.
- Contractual adjustmentContracts with suppliers and clients need to be reviewed to reflect changes in tax rates and payment methods.
- Team trainingThe understanding of the new tax model will be a competitive advantage. Accounting and finance professionals need to stay updated.
With the "split payment" and non-cumulativity, Brazil is moving towards a more efficient tax model aligned with international practices. However, the implementation will be challenging and will require planning, reliable data, and cutting-edge technology. "Whoever masters the numbers and understands the subtleties of this new system will have an undeniable competitive advantage. And that begins now, in 2025, with companies preparing before it's too late," highlights Ribeiro.
