1. The Dual VAT Framework: IBS and CBS
The framework establishes the federal Contribution on Goods and Services (CBS) and the subnational Tax on Goods and Services (IBS) under comprehensive non-cumulative input tax credits. Tax paid on upstream construction inputs (rebar, concrete, heavy equipment leases, technical design) offsets downstream liabilities.
2. Specific Real Estate Regime
Recognizing multi-year project lifecycles, regulations define specific rules for real estate development:
- Rate Reduction Factors: Substantial percentage discounts applied against the standard benchmark VAT rate to maintain housing and commercial affordability;
- Adjusted Tax Base: Deductibility of land acquisition value and direct input purchases from total taxable revenue;
- Input Tax Credits: Comprehensive credit accumulation across raw materials, equipment leases, and subcontracted MEP services.
3. Multi-Year Transition Calendar (2026-2033)
A gradual transition phase prevents market disruption:
- 2026: Pilot benchmark testing with a 0.9% CBS and 0.1% IBS rate;
- 2027: Full federal CBS enforcement and permanent sunset of legacy PIS and COFINS;
- 2029-2032: Phased 10% annual reduction of state ICMS and municipal ISS alongside proportional IBS increases;
- 2033: Full nationwide unification under the Dual VAT architecture.
4. Technical Management and Project Budgeting
RGD Service integrates engineering cost scheduling with milestone field auditing. Clear contractual delineation between material supplies and specialized engineering services ensures rigorous compliance and verified tax credit documentation.