Thought Leadership

What kind of impact has tax reform had on the economy over the last two years?

Brazil’s tax reform process has created both challenges and opportunities. On one side, uncertainty about the final structure and implementation timeline has led businesses to adopt a cautious approach in their investment and expansion strategies. This temporary slowdown has been felt particularly in industries heavily dependent on tax incentives or special regimes, such as manufacturing and services.

On the other hand, the reform has generated strong expectations for a more simplified and transparent tax environment. By aiming to unify VAT taxes and reduce overlapping obligations, the reform is expected to lower compliance costs in the long term and improve the overall business environment. While the short-term impact has been marked by adaptation and cautious optimism, the medium to long-term outlook remains positive for both efficiency and competitiveness.

The Brazilian tax reformed will be in force starting on January 1st, 2026.   Due to the complexity of the Brazilian tax structure it was defined by the government a transitory timeline that will take the following 8 years.

Brazil will move from an actual tax system (State VAT – “ICMS”, Federal VAT – “IPI”, Service Tax – “ISS” and Gross Receipt Taxes – “PIS and COFINS”) to a new tax system that includes Tax over Goods and Services (IBS), Contribution over Goods and Services (CBS) and Selective Tax (IS).  The IBS will consolidate the ICMS and ISS, the CBS will mainly replace PIS and COFINS (and in somehow IPI) and the IS is a new tax created considering its tax event goods and services that are harmful to health and environment.

There are some relevant changes between the two structures such as: tax event, rates, place of taxation, possibility of tax credits.  Such changes and the transitory period defined by Brazilian Government will attract relevant action, changes and investments to Brazilian Companies.

Companies must evaluate the potential new tax burden in the future scenarios and other actions that will demand other areas actions (Brazilian tax reform is a multidisciplinary reform), such as the examples below:

• Supply:  Potential changes in the price charged by the supplier due to tax burden (increase or decrease)
• Sales/Clients: Potential changes in the price charged to the clients due to tax burden (increase or decrease)
• System: New parametrizations to include the new tax rules
• Legal: Contracts review
• Financial: Evaluate cash flow impact, review financial modeling
• Accounting: New discussions mainly in the accountability of tax credits.

Have there been any significant regulatory developments in Brazil over the last 12 months?

Yes, the past year has seen important regulatory updates, particularly linked to tax reform implementation. The government has advanced discussions on the new value-added tax system (IBS and CBS), and businesses are preparing for gradual transitions starting in the coming years. It includes new digital obligations and adjustments to reporting frameworks to align with the future model.

Additionally, regulatory authorities have tightened rules around transfer pricing to bring Brazil closer to OECD standards. Companies are also facing greater scrutiny in areas like anti-money laundering, electronic invoicing, and cross-border transactions. Altogether, these developments show a clear trend toward modernization, digital integration, and alignment with international best practices.

How would you describe the health of the accounting industry in Brazil in terms of customer demand, fee pressure, and staff recruitment and retention?

The accounting industry in Brazil remains resilient, with customer demand consistently high due to the country’s complex tax environment. Businesses of all sizes continue to rely heavily on accounting firms for compliance, advisory, and tax planning services, ensuring a strong baseline of demand.

However, fee pressure has increased, especially in more commoditized areas of compliance. Many clients expect cost efficiency, pushing firms to adopt automation and digital tools to maintain profitability. At the same time, recruitment and retention of skilled professionals is one of the industry’s biggest challenges. High turnover and strong competition for talent, particularly in tax and audit, force firms to invest more in training, flexible work models, and employee engagement strategies.  

Are there any services areas where demand has grown over the last 12 months?

Yes, we can identify demand has grown in several specialized areas. Tax advisory has expanded significantly, as companies seek clarity and strategies to adapt to ongoing tax reform. Compliance automation and digital solutions, such as e-invoicing systems and integrated ERP-tax platforms, have also seen strong growth, driven by regulatory complexity and efficiency needs.

Another fast-growing area is ESG-related reporting and assurance. Investors, regulators, and stakeholders increasingly expect companies to provide transparent disclosures on environmental and social impacts. Accounting firms are stepping in to provide advisory and assurance services in sustainability reporting, carbon accounting, and governance frameworks, positioning this as a key growth frontier.  

Has there been any significant consolidation or merger activity in the accounting profession?  

There has been some consolidation, particularly among mid-sized and regional firms. The main driver has been the need to expand service portfolios, invest in technology, and compete with larger players. Firms that traditionally operated in local markets are seeking to merge or form alliances to gain scale and improve competitiveness.

While consolidation has not been as intense as in other industries, the trend is evident. International networks are also strengthening their presence in Brazil, bringing in global practices and technology investments. This dynamic is gradually reshaping the competitive landscape, encouraging firms to modernize their services and business models.  

What are your expectations for the next 12 months - are there any potentially significant developments in the pipeline?

The next 12 months are expected to be marked by continued advances in tax reform implementation. The government will likely release new regulations and transitional rules, requiring businesses to adapt their systems and processes. This will generate high demand for advisory services and technological adjustments across industries.

Digitalization will also deepen, with regulatory bodies pushing for more integrated and real-time tax reporting obligations. In parallel, ESG requirements are expected to evolve, and more companies will seek professional support in reporting and assurance. Overall, the accounting profession will play a central role in guiding businesses through uncertainty, managing compliance risks, and positioning for growth in a more transparent and competitive environment.