Brazil’s tax reform and government contracts: how to request rebalancing from 2027

This note covers contracts with federal, state, Federal District and municipal bodies and entities, including concessions. Contracts between private companies are outside this regime (article 373, paragraph 2).

At a glance: what the law guarantees

Why the contract may fall out of balance

The price of a government contract was set on the basis of the taxes in force when the proposal was submitted. Under the reform, PIS and Cofins give way to the CBS in 2027. The IBS already applies in a test phase, with a low transitional rate through 2028, and the replacement of the ICMS and the ISS advances from 2029 to 2032, ending in 2033 (Constitutional Amendment No. 132/2023). The new system allows companies to take credits for taxes paid on purchases, which changes each company’s final cost.

The effect depends on the business. A company that buys many taxed inputs tends to generate more credits and may see its burden fall. A service provider whose main cost is labor generates few credits and may see its burden rise. That is why the law uses the effective tax burden as its measure.

Who is entitled

The rebalancing chapter of Complementary Law No. 214/2025 applies to contracts of the direct and indirect public administration at every level of government, including concessions, that were in force when the law took effect on January 16, 2025 (articles 373 and 374). Where applicable, it also covers contracts signed after that date if the proposal was submitted before it (article 373, paragraph 1).

To measure the effective tax burden, the law requires taking into account, among other things, credits under the non-cumulative system, the ability to pass the tax on to third parties, the effects of each stage of the transition and the loss of tax benefits or incentives tied to the abolished taxes (article 374, paragraph 1).

The right applies even when the contract allocates the effects of subsequent tax changes to the contractor. The law expressly states that the chapter applies to contracts whose risk matrix already contains that allocation (article 374, paragraph 2).

How to file the request

The request follows a specific administrative procedure and must be handled as a priority (article 376, main text and item III). The law sets the following rules:

• The request must be filed while the contract is in force and before any extension (article 376, II). Law No. 14,133/2021, Brazil’s Public Procurement Law, imposes the same requirement on rebalancing requests in general (article 131, sole paragraph).
• The company may file a request for each tax change that causes an imbalance, or a single request covering all the changes scheduled for the transition period (article 376, I).
• The calculations and other material showing the actual imbalance must accompany the request (article 376, IV).
• Rebalancing may take the form of an adjustment of contract values, financial compensation or tariff adjustments, renegotiation of deadlines and conditions, changes to amounts owed to the government, including concession fees (outorga), or a transfer of costs between the parties (article 376, V). Adjusting the contract price or the tariff is the preferred route; other forms require the contractor’s agreement (paragraph 2).
• The government has 90 days from filing to issue a final decision, extendable only once, for a further 90 days, if further evidence is needed. The deadline is suspended while the company has not answered requests for information (paragraph 1).
• If the company shows a significant financial impact, the government may, at its discretion and under the applicable regulations, apply an interim adjustment, to be settled in the final decision with collection or refund of any difference (paragraphs 4 and 5).

Each government body or entity may issue rules on how to file the request and on the calculation method. The absence of such rules does not prevent the company from filing (article 376, paragraph 3).

For federal highway concessions, the National Land Transportation Agency (ANTT) put out for public input in October 2026, with comments due by October 30, a draft normative instruction to offset, on an interim basis, the effects of the reform in 2027 and 2028. The draft provided for an interim adjustment corresponding to 60% of the estimated net impact, subject to a subsequent final adjustment.

When the tax burden falls

If the contractor’s effective tax burden falls, the government must review the contract on its own initiative to restore the balance, and the company has the right to be heard before the decision (article 375). In practice, the same calculation that supports a request for an increase may be used by the contracting body to seek a reduction.

What to do now

These are organizational recommendations, not express legal requirements:

• List current government contracts, with their expiry and extension dates.
• Map the current tax burden of each contract (PIS, Cofins, ICMS, ISS and tax incentives) and project the burden under the CBS from 2027, taking credits into account.
• Check whether the contracting body or the regulatory agency has issued rules on the request or the calculation method.
• Before any extension, file the request for any imbalance that has already occurred. Impacts that arise only after the amendment extending the contract term require separate analysis.
• Keep the tax and accounting records that show the burden before and after the change.

Frequently asked questions

Is rebalancing automatic from 2027?

No. The law guarantees rebalancing when the imbalance is proven. The company must show, with calculations, that its effective tax burden has changed (Complementary Law No. 214/2025, articles 374 and 376, IV). If a reduction in the burden is found, the government must review the contract (article 375).

My contract says new taxes are the company’s risk. Can I still file a request?

Yes. Complementary Law No. 214/2025 states that the rebalancing chapter applies even to contracts whose risk matrix allocates the effects of subsequent tax changes to the contractor (article 374, paragraph 2).

What is the deadline for filing?

While the contract is in force and before any extension (article 376, II). A request concerning an imbalance that has already occurred must be filed before the amendment extending the contract term is signed; impacts that arise only after that amendment require separate analysis. The company may file for each change or submit a single request for the whole transition (article 376, I).

My contract was signed after January 2025. Am I entitled?

The chapter of Complementary Law No. 214/2025 covers contracts signed after January 16, 2025 only when the proposal was submitted before that date (article 373, paragraph 1). In other cases, the law governing the contract must be examined, including, where applicable, article 134 of Law No. 14,133/2021, which provides for a price change when taxes are created or changed after the proposal is submitted and the effect on prices is proven. Because Complementary Law No. 214/2025 had already been published when the proposal was submitted, each case needs to be analyzed.

What about contracts between private companies?

They are outside this regime (article 373, paragraph 2). The contract terms and civil law govern. That is why it makes sense to review the price and tax clauses of long-term contracts before 2027.

Open questions

As of November 14, 2026, we had not located general federal rules on how to file the request and on the calculation method, nor the publication of ANTT’s final act for highway concessions. The IBS and CBS reference rates depend on a Senate resolution.