Starting January 1, 2027, the Brazilian tax landscape officially enters a new era: the long-standing PIS/COFINS taxes will be phased out and replaced by the new Contribution on Goods and Services (CBS). The news is well known, but it may not yet have been digested with the urgency and attention the moment requires.
By the end of 2026, many companies may hold significant balances of unused PIS/COFINS credits for a variety of reasons. The uncomfortable but unavoidable question is: will these credits survive under the new system? Or do they risk being lost amid a poorly managed tax transition?
Unfortunately, the answer is not simple. Complementary Law (LC) No. 214/25 promises that PIS/COFINS credits that have not been utilized or claimed by December 31, 2026, will remain valid — but only if they are properly recorded by that date.
But what does “properly recorded” actually mean? This subtle ambiguity opens the door to two interpretations that may determine the fate of these credits.
The first, more literal interpretation, suggests that the credits must be fully recorded in the accounting books by December 31, 2026. If not, the right to claim them would be lost. According to this view, the formality of registration by the time PIS/COFINS is extinguished would be non-negotiable.
The second, and more taxpayer-friendly, interpretation is systemic. Under this view, credits that materially exist as of December 31, 2026, would be preserved — even if they haven’t yet been formally recorded. Registration would occur, even retroactively, at the time of their effective use. Supporters of this interpretation argue that the right to credit, in line with the principle of non-cumulativity, should prevail, along with the five-year period to use the credits or to request reimbursement for overpaid taxes.
However, as we know, the Brazilian Federal Revenue Service has a long track record of interpretations that do not always favor taxpayers. Relying on a lenient interpretation could be a risky bet.
Therefore, what’s at stake is not only adapting to the CBS, but also preserving resources that, if well managed, could provide immediate cash relief and competitive advantage in the short term. Close attention to these issues now could make a significant difference in future results.
The tax reform is not a future event — it is a reality already in motion. The transition phase between January 1 and December 31, 2026 — when CBS will apply at a reduced rate and PIS/COFINS will still be in force — is a critical period to review and optimize PIS/COFINS assessments. We recommend that taxpayers stay alert!
The new CBS system, with its financial credit model, may limit or exclude some of the credits currently permitted under the PIS/COFINS regime. A word of caution: CBS will not automatically inherit the logic of credit utilization from the previous legislation.
LC No. 214/25 sets a maximum period of five years to use PIS/COFINS credits after the end of those taxes — until the end of 2031. After that date, any unused credits will be permanently lost.
Postponing the attention to this reality may lead to significant financial impacts. Now is the ideal time for companies to begin — or strengthen — efforts to identify, regularize, and maximize their tax credits.
The transition was designed to allow for the broadest possible use of these “tax residues.” However, this possibility depends directly on taxpayers’ attention to proper bookkeeping, deadlines, and legal conditions. A detailed plan, supported by a thorough review of your tax controls, is the key to ensuring that these credits can be fully utilized in the new tax framework.