Brazil Introduces New Dual VAT Options for Companies under the Simplified Tax Regime

From 2027, Brazil’s Resolution CGSN No. 190/2026 lets Simplified Tax regime companies choose whether State VAT and Federal VAT stay within the simplified regime or follow the regular dual VAT system. The six-month choice is especially relevant for B2B companies because it can affect customer tax credits. 

Resolution CGSN No. 190/2026 introduces an important tax choice for companies under Brazil’s Simplified Tax regime from 2027. Companies will be able to remain in the Simplified Tax regime while choosing whether the State VAT and Federal VAT are calculated within the Simplified Tax regime or under the regular tax regime.

Companies under the Simplified Tax regime will have two possibilities for the dual VAT system:

• Keep the Federal VAT and State VAT within the Simplified regime, together with the other taxes covered by the simplified regime, or
• Use the regular dual VAT regime, while keeping the remaining taxes under the Simplified Tax Regime.

The second option creates a hybrid model: the company remains a Simplified Tax regime taxpayer, but the State VAT and Federal VAT are calculated separately under the regular system.

The choice will apply for six-month periods.

For the first half of 2027, companies must opt for the regular dual VAT regime through the Simplified Tax regime Portal between September 1 and September 30, 2026. The choice will apply from January 1 to June 30, 2027.

Companies that make the September choice may cancel it until November 30, 2026. However, October and November are not additional enrollment periods.

For the second half of 2027, a new option window will run from March 1 to March 31, 2027, with effect from July 1, 2027.

This is particularly important for B2B companies. If the State VAT and Federal VAT remain inside the Simplified Tax regime, the purchaser's tax credit will generally be limited to the State VAT and Federal VAT actually collected by the company under the Simplified Tax regime.

Companies mainly selling to individual consumers may face less pressure from this issue because consumers generally do not use State VAT/Federal VAT tax credits.

What should companies do?

Businesses under the Simplified Tax regime should simulate both tax models before September 2026. The analysis should compare the expected tax burden, available input credits, pricing, customer structure and overall commercial impact.

There is therefore no single model that will be best for every company. Resolution CGSN No. 190 makes tax planning an important part of preparing for the dual VAT system from 2027.

The main source for this change is the Resolution CGSN No. 140/2018 provided by the Brazilian Federal Tax Authority (Federal Revenue Service). Source

Ivana Picajkić, Medior Legal Consultant at Fiscal Solutions

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