Investment Grants, Tax Reform, and IBS/CBS: Are We Facing a New Revenue Gap?

The recent change in the tax treatment of investment grants, following Law No. 14,789/2023, has completely repositioned these transfers within the federal tax system. The Brazilian Federal Revenue Service has made its stance increasingly clear, for example through the recent Consultation Ruling (Solução de Consulta) Disit/SRRF04 No. 4,066, dated December 24, 2025, establishing that, as of 2024, all investment grants are subject to taxation by Corporate Income Tax (IRPJ/CSLL) as well as PIS and COFINS, albeit with the possibility of an IRPJ tax credit on the taxed revenue for implementation or expansion projects.

With the extinction of PIS and COFINS and the creation of the CBS—a tax that, like the IBS, applies exclusively to transactions involving goods and services—it is noteworthy that Complementary Law No. 214/2025 did not include investment grants among the taxable events of the new dual VAT system. The law is explicit in stating that both the IBS and the CBS apply solely to onerous transactions involving goods or services, in line with the rationale of a consumption tax

However, this leads us to some important questions:

• If investment grants were previously treated as taxable revenue for PIS/COFINS purposes in several situations, on the grounds that they formed part of the company’s operating revenue, what will be the impact, in terms of tax collection, of their non-incidence under the IBS/CBS?

• In a system that seeks neutrality and base broadening, does it make sense for a government transfer—recently reclassified to be subject to PIS and COFINS under Law No. 14,789/2023—to be entirely outside the scope of the IBS/CBS?

• Moreover, could future interpretative debates attempt to bring certain types of grants closer to an expanded concept of “onerous transactions,” akin to the discussions surrounding donations with consideration?

• Or are we, at last, facing a deliberate legislative choice to distance the IBS/CBS from any form of taxation on revenues that do not involve economic circulation between private parties, such as, in this case, investment grant income?

These are questions that remain open and will certainly gain relevance as the implementation of the new tax system moves forward.

Text produced by Guilherme Craveiro and Julia Torres.