Brazil's Tax Reform: Intellevo Has Already Implemented the Available SAP Notes

Brazil's tax reform took effect with Complementary Law 214/2025, bringing significant changes for companies and their ERP systems. Implementation is taking place in phases, with gradual adjustments to the tax base and the replacement of current taxes through 2027, according to the Ministry of Economy's timeline.

Intellevo is ahead of this transition and has already applied the SAP Notes available through January 2025 in an S/4HANA environment to assess the impact of the reform and track the progress of the SAP solution.

In this article, we look at the key points of the reform, how it affects SAP systems, and what Intellevo is doing to help its customers through this transition.

What changes with Brazil's tax reform?

Brazil's tax reform introduces three new taxes that replace or complement current taxes. Implementation will take place in phases, with adjustments scheduled for 2026 and 2027:

• CBS (Contribution on Goods and Services): a federal tax that replaces PIS and COFINS (federal contributions levied on revenue) and IPI (Tax on Industrialized Products).
• IBS (Tax on Goods and Services): a tax shared between states and municipalities that replaces ICMS (state tax on the circulation of goods and services) and ISS (municipal tax on services).
• IS (Selective Tax): a federal tax known as the “sin tax,” levied on products that harm health or the environment, such as alcoholic beverages, cigarettes, and soft drinks. Unlike the others, the IS does not replace any existing tax.

These changes require a review of tax processes and adjustments to ERP systems, especially SAP, which handles invoice issuance and tax calculation.

Impact on SAP: what is already available?

SAP has already released the first notes related to the new legislation. Although this is a preliminary solution, Intellevo applied these notes in SAP S/4HANA to assess the impact of the changes.

Main SAP Note: 3561376 – Brazilian tax reform: delivery and support guidelines.

After applying the SAP Notes released so far, the following new tax conditions are available in SAP:

Tests and observations

To validate what SAP has delivered so far, we created the same invoice for testing in the following scenarios:

Scenario 1: Using the current taxes (ICMS, PIS, and COFINS).

Scenario 2: Implementing the new taxes (CBS and IBS), following the reform criteria.

In our tests, we excluded IBS from the CBS tax base, similar to the current relationship between ICMS and PIS/COFINS. However, we found that the taxes may still be added “on top of” the product price, which affects the invoice total. We also had to include a tax from a pre-existing group (such as IPI) for the system to accept the new configuration.

Important note

SAP's solution for Brazil's tax reform is still at an early stage and therefore incomplete. Some of the discrepancies we found, such as the way taxes are calculated “on top of” the price, are expected to be fixed in upcoming updates.

Next steps

Intellevo will stay at the forefront of tax changes in SAP systems and has already implemented these notes in its internal environment. This allows us to assess the impact and keep our customers informed to ensure a safe and efficient transition.

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