The consumption tax reform goes beyond creating new taxes and simplifying the system. Considered one of the main changes in the country’s economic structure in recent decades, the reform profoundly changes the logic of price formation for companies in Brazil.
According to the managing partner of accounting and institutional relations at Contabilizei, Charles Gularte, the reform introduces a difference that until then had little weight in the pricing of products and services: the end customer profile.
From 2027 onwards, pricing needs to consider whether the contractor is an individual, a micro-enterprise or a larger company, an aspect that changes the perceived cost of the service and can define who remains competitive in the market.
“With the expansion of the tax debit and credit logic, companies start to take credit only on the tax actually paid throughout the chain. Thus, suppliers who pay less tax, such as Simples Nacional companies, start to generate less credit for those who hire”, says Gularte.
This new logic tends to have a greater impact on small businesses, which will face more difficulties in generating tax credits compared to large companies.
“If two suppliers have similar prices, but one of them generates more tax credit for the contractor, that supplier becomes more competitive, even if the nominal price is higher”, explains Gularte.
“The risk is that small businesses will lose contracts without understanding exactly why”, adds the executive.
Greater impact on the services and civil construction sector
The effect of the reform will not be uniform across sectors, explains Gularte. Segments of the economy such as retail and industry tend to feel less of the impact, as they operate in long purchase and sale chains, with recurring generation of tax credits.
This dynamic will make it possible to dilute the tax along the chain and make credit a natural part of the business cost, without significantly affecting competitiveness between suppliers.
On the other hand, the services sector faces more challenges. This happens because the segment operates in short supply chains, with few taxable inputs and low credit generation throughout the process.
As the main expense of these businesses is labor, which does not generate tax credits, the tax tends to be concentrated at the top end, putting pressure on margins or prices.
“In general, independent professionals, developers, architects and service providers have few inputs that generate tax credits, as most of their costs are concentrated in labor”, he highlights.
“As a result, the tax tends to be concentrated at the end of the supply, reducing the capacity for compensation throughout the chain. In practice, these businesses may end up paying more tax or becoming less attractive to companies that value the tax credit in their hiring decision.”
This effect is even more sensitive in civil construction, a sector marked by fragmented production chains, strong dependence on services and low generation of tax credit throughout the process.
Liêda Amaral, partner at BSSP Consulting, a tax consultancy company specialized in the context of reform, and one of the authors of the consultancy’s recent study, “Tax Reform – analysis of impacts on the construction production chain”, points out that the new logic of IBS (tax on goods and services) and CBS (contribution on goods and services) has the potential to significantly increase the sector’s costs.
“Civil construction intensively combines services and labor, which do not generate tax credit, with an input chain that is often dispersed. As a result, the tax is concentrated at the end, putting pressure on final prices, margins and the economic viability of medium and long-term contracts”, says Liêda.
“In some cases, the impact can represent significant increases in the total cost of works, generating an increase of up to 20%, requiring a review of pricing and negotiation models.”
Simple Hybrid and Early Decisions
To mitigate part of this effect, the reform creates the so-called Simple Hybrid, allowing adjustments throughout the year.
Developed to provide more flexibility to Simples Nacional companies in the face of the new credit and debit logic, the model authorizes the entrepreneur to calculate the new consumption taxes under the regular regime when this is most advantageous for their operation, thus providing the generation of credit in its entirety for customers and also the taking of credit for inputs.
Even so, the choice of tax regime will continue to require an advance decision and a greater level of planning because this decision must take place every six months, in the months of September and March preceding each semester, starting in January and July of each year.
For 2027, for example, the definition will need to be made in the 2nd half of 2026, which forces the entrepreneur to project future scenarios, evaluate possible changes in the profile of customers served and estimate how these variables may affect prices, margins and competitiveness throughout the following year.
“The problem is that small business owners today have difficulty forming prices correctly. Many do not consider all costs, miscalculate the hours worked or apply inadequate margins. With the reform, the error will cost even more”, warns Gularte.
Given this scenario, the specialist’s main recommendation to small entrepreneurs is to start dealing with price formation and the choice of tax regime in a strategic way.
It is worth mapping the types of customers served, understanding which of them can claim the tax credit and simulating different pricing scenarios and business models.
These become essential steps to avoid loss of margin and competitiveness. More than seeking the apparently lowest tax, it will be increasingly important to align price, customer profile and tax regime with the business growth strategy.
Competitiveness goes through price
the impact tends to manifest itself indirectly, mainly at the end of the market, in the commercial relationship between those who hire and those who provide the service.
“Whoever hires will look at the supplier differently. It’s not just about the tax paid, but about the final cost of hiring after taking advantage of the tax credit”, says Gularte.
For the expert, the debate needs to go beyond explaining the law or formal changes to the system.
“The reform changes the competitiveness game. Understanding how this new logic impacts pricing, contracts and market positioning is essential so that small businesses do not lose margin, contracts and sustainability in the medium and long term”, he concludes.
