Brazil's tax reform: what Asia-Pacific companies expanding into Latin America need to know

Brazil is undertaking its most significant tax overhaul in decades: a simplification of indirect taxes at the federal, state, and municipal levels. The reform consolidates multiple overlapping consumption taxes into a streamlined dual-VAT structure. IBS (Goods and Services Tax) operates at the sub-national level and CBS (Contribution on Goods and Services) at the federal level, together replacing the current patchwork of PIS (Social Integration Program Tax), COFINS (Social Security Tax), IPI (Industrial Product Tax), ICMS (Movement of Goods & Services Tax), and ISS (Service Tax).

In practice, this means a simplification of indirect taxes with fewer taxes and fewer filings, and a unified system replacing five separate indirect taxes. It also introduces full input-credit mechanisms that eliminate the cascading tax-on-tax effects that have long inflated costs across supply chains. Companies gain greater predictability through standardized rules that reduce the risk of state-by-state interpretation differences, alongside a shift to destination-based taxation where tax is collected where goods and services are consumed rather than where they originate.

The transition period runs from 2026 to 2033, with the new system fully operational by 2033.

For Asia-Pacific enterprises evaluating Brazil, whether for manufacturing, energy, EVs, agrotech, or infrastructure, the reform directly addresses one of the biggest historical barriers to entry.

Before the reform:

• Multi-layered tax regulations across federal, state, and municipal jurisdictions
• Complex compliance and reporting obligations that varied by location
• Cascading taxes that inflated costs across supply chains
• Significant advisory spending just to understand obligations

After the reform:

• A simpler, more transparent system that reduces compliance costs
• Clearer cost modelling for feasibility assessments and investment decisions
• Reduced operational friction for companies importing goods, manufacturing locally, or selling across Brazilian states
• A more predictable environment aligned with how APAC companies plan long-term capital deployment

China is Brazil's largest trading partner, with bilateral trade exceeding USD $180 billion in 2024. Chinese companies are expanding rapidly into EVs (BYD's Bahia factory), renewable energy, electronics, and critical minerals. Enablers include Renminbi/Brazilian Real- currency settlement mechanisms, BRICS-strengthened cooperation frameworks, and expanding bilateral investment agreements.

Singapore serves as a major gateway for APAC capital into Latin America. Sovereign wealth funds, PE firms, and family offices are increasingly deploying into Brazilian infrastructure, fintech, and agribusiness. The Singapore–Brazil Double Taxation Agreement and Singapore's extensive treaty network make it a natural holding-company jurisdiction for APAC investors structuring Brazil-bound investments.

Across the broader region, Japanese trading houses, Korean conglomerates, and Australian mining firms have long operated in Brazil. The reform benefits all of them by reducing the compliance overhead that has historically required disproportionate local advisory spending.

Even with reform, Brazil remains a market where expert guidance matters. The CLT (Consolidation of Labor Laws)  framework governs employment, payroll, and termination with considerable rigidity. During the transition period, dual systems will run in parallel, creating temporary uncertainty. Regulatory permits vary by industry and state, and statutory accounting obligations (Brazilian GAAP and IFRS alignment) remain intensive. Add Portuguese-language documentation and local business customs, and the case for on-the-ground support becomes clear.

Companies that navigate this complexity well gain a lasting competitive advantage. Those that underestimate it face delays, unexpected costs, and regulatory exposure.

Vistra's Latin America’s team, strengthened by our 2025 acquisition of Biz Latin Hub, operates across 18 jurisdictions with local professionals who understand both the regulatory landscape and the needs of APAC-headquartered businesses. Our integrated Brazil team brings together legal, tax, accounting, HR, and corporate secretarial capabilities under one roof, with multilingual coordination in Mandarin, English, and Portuguese.

From feasibility assessment through to ongoing compliance, we help companies move from opportunity to operation.

The tax reform has opened a window. Let's make sure you're ready to move through it.

Book a confidential feasibility consultation with our Latin American team. Contact us