● Legislation

Brazil's CBS at 11.3% in 2027: what changes in outsourcing contracts

Brazil's Federal Court of Accounts approved the 2027 CBS reference rate. See how the end of PIS and Cofins affects outsourcing prices, contracts and clients.

By Tirvu Team·October 28, 2026·10 min read

On Wednesday, October 28, 2026, the full bench of Brazil's Federal Court of Accounts (Tribunal de Contas da União, TCU) approved the 2027 reference rate for the CBS (Contribuição Social sobre Bens e Serviços), the new federal tax on goods and services: 11.3%. The calculation came to 11.3468%, rounded as required by Complementary Law 214/2025 (LC 214), the law that regulates the tax reform. The result goes to the Federal Senate by Friday (October 30), and the Senate has until December 15 to set the rate by resolution. If it does not vote in time, the TCU's calculation prevails.

In January 2027, the CBS replaces PIS and Cofins, two federal contributions levied on company revenue, and it works with credits: the CBS paid on purchases is deducted from the CBS due on sales. For labor outsourcing companies, such as security, cleaning, reception and facilities providers, the sensitive point is that payroll does not generate credits. For those who hire them, the effect depends on each client's tax situation.

This article reflects the legislation and the official information available on its publication date.

What the TCU approved

The decision was taken in a special session, with the court's president, Vital do Rêgo, as rapporteur (case TC 006.529/2026-7). According to InvestNews, Brazil's Federal Revenue Service (Receita Federal) delivered its calculation model to the TCU on September 14, and the Management Committee of the IBS (Imposto sobre Bens e Serviços), the state and municipal tax on goods and services, had been using 9.21% as its projection since July.

As a rule, the Senate sets the reference rate by October 31 of the previous year (Art. 349, §1). In 2026, those deadlines were extended by 45 days (Art. 353, §2), which leads to December 15.

According to the TCU, the 11.3% is a reference and does not necessarily match the rate that will actually be charged. The federal government may set the CBS rate by specific law; without one, the reference rate applies (Art. 14). In 2027 and 2028, the CBS rate is reduced by 0.1 percentage point (Art. 347 of LC 214 and Art. 127 of the Constitution's Transitional Provisions, or ADCT). If the reference stays at 11.3% and no federal law sets a different rate, the standard CBS rate in 2027 will be 11.2%.

The transition timeline

January 2027: actual collection of the CBS begins, and PIS and Cofins are abolished (Art. 126 of the ADCT, added by Constitutional Amendment 132/2023, and Art. 542 of LC 214).
2027 and 2028: the IBS is charged at 0.05% (state) and 0.05% (municipal) (Art. 344), and the CBS rate is 0.1 point lower.
2029 to 2032: ICMS, the state tax on goods and on transport and communication services, and ISS, the municipal tax on services, are phased down, from 9/10 of their rates in 2029 to 6/10 in 2032 (Art. 128 of the ADCT).
2033: ICMS and ISS cease to exist (Art. 129 of the ADCT and Art. 543 of LC 214).

Why payroll does not generate credits

A taxpayer under the standard regime (regime regular), which covers those that have not opted for Simples Nacional, the simplified tax regime for small businesses, or for the individual microentrepreneur regime, MEI (Art. 41, §1), takes credit for the CBS shown on the electronic invoices for its purchases and uses that credit to settle the CBS due on its sales (Arts. 27 and 47). As a rule, the credit depends on the supplier's tax debt having been settled (Arts. 47 and 48).

LC 214, however, does not levy CBS on services provided by individuals under an employment relationship with the taxpayer (Art. 6(I)(a)). With no CBS at the source, there is no credit: wages and payroll charges are left out. In labor-intensive services, a large part of the cost generates no credit.

There are useful exceptions for companies with staff assigned to client sites, or posts: uniforms, personal protective equipment (PPE), transportation, meal and food vouchers, health plans provided for in collective agreements, and weapons and ammunition used by security companies are not considered personal use or consumption and may generate credits (Art. 57, §3). For vouchers and health plans, the credit equals the debt the supplier calculated and paid under its own specific regime.

In an article published on October 1 by ConJur, a Brazilian legal news site, three lawyers argue that this design creates an incentive for pejotização (hiring workers as legal entities, or PJs, instead of as employees), since a service bought from a legal entity can generate credits. They note that an employment relationship is defined by the facts. The risks are covered in Pejotização at Brazil's Supreme Court: what Tema 1389 means for HR.

For clients, it depends on who they are

The CBS is shown separately on the invoice and is not part of its own tax base (Art. 12, §2(I)). The effect depends on who pays:

Client	What happens to the CBS on the invoice	Basis in LC 214
Company under the standard regime	Becomes a credit, under the law's conditions	Arts. 47 and 48
Simples Nacional company that has not opted for the standard regime	Generates no credit	Art. 47, §9(I)
Condominium association (condomínio edilício) that has not opted for the standard regime	As a rule, generates no credit	Art. 26
Individual, as an end consumer	Generates no credit	Art. 47
Government bodies, public agencies (autarquias) and public foundations	Charged with the reduction factor, with exceptions	Arts. 9, §4, and 472

For a company under the standard regime, the CBS tends to be neutral, because it comes back as a credit; for those who cannot take credit, it is a cost. Simples Nacional companies and condominium associations may opt for the standard regime (Arts. 41, §3, and 26, §1), a decision to make with your accountant. Conversely, if the outsourcing company is under Simples Nacional and has not opted, a client under the standard regime can only take credit for the amount due under Simples (Art. 47, §9(II)).

Illustrative, simplified example: on a R$100,000 service before consumption taxes, an 11.2% CBS adds R$11,200. A company under the standard regime pays R$111,200 and recovers R$11,200 as a credit, for a net cost of R$100,000. A condominium association that has not opted pays the same R$111,200 and recovers nothing. The example ignores the IBS, the ISS and each company's specific credits, and compares two clients under the new system, not the 2027 price with today's.

Public contracts: rebalancing and the reduction factor

LC 214 has a chapter on the economic and financial rebalancing (reequilíbrio) of public administration contracts (Arts. 373 to 377):

Scope: contracts of the direct and indirect public administration at every level of government, including concessions, in force on January 16, 2025, when the law took effect, and, where applicable, those signed later with a bid submitted before that date (Arts. 373 and 374).
Proven imbalance: the contractor's effective tax burden takes into account, among other factors, credits, the possibility of passing on the cost and the effects of the transition, even if the contract's risk matrix assigns tax impacts to the contractor (Art. 374).
Both ways: if the burden falls, the administration revises the contract on its own initiative, after hearing the contractor (Art. 375).
Contractor's request: with each change, or once to cover the transition changes, during the contract term and before any extension, with calculations proving the imbalance. A decision is due within 90 days of filing, extendable once (Art. 376).

There is also the reduction factor (redutor): on purchases by the direct public administration, autarquias and public foundations, CBS and IBS rates are cut by the percentage set by the Senate (Arts. 349 and 472). For 2027, it is calculated so that the CBS on these purchases raises the same as the federal reference taxes (Art. 370, §1), and the TCU proposed 44.2%. The reduction factor does not apply, among other cases, to purchases subject to Simples Nacional or to the MEI regime (sole paragraph of Art. 472).

Private contracts

The rebalancing chapter does not apply to private contracts, which follow their own specific legislation (Art. 373, §2): what each contract says applies. Check whether the price was set "with all taxes included" or with taxes shown separately, whether there is a clause for revision when taxes change, and whether the current price adjustment period runs past January 2027.

What to do now

List the contracts that run past January 2027 and reread the clauses on price, taxes, adjustment and revision
Classify your client portfolio by the client types in the table above
Separate, for each contract, payroll costs from purchases that may generate credits, such as supplies, uniforms, PPE and vouchers
Recalculate prices with your accountants, using 11.2% as a working assumption until the Senate decides
Check PIS and Cofins credit balances, which may be used to offset the CBS (Art. 378)
For public contracts, prepare the cost breakdown for a rebalancing request while the contract is in force
Follow the Senate vote until December 15

Frequently asked questions

Is the 2027 CBS rate already set?

Not yet. The Senate has until December 15 to set it; without a vote, the TCU's calculation of 11.3% prevails. With the 0.1-point reduction in 2027 and 2028, the standard rate would be 11.2%, unless a federal law sets a different rate. The 2028 reference rate will be set next year.

Do wages and payroll charges generate CBS credits?

No. The CBS is not levied on employees' work (Art. 6(I)(a)), and credits come from the CBS shown on purchases (Art. 47). The law allows credits on items such as uniforms, PPE and vouchers (Art. 57, §3).

Can a condominium association that hires reception services recover the CBS?

As a rule, no: a condominium association is not a taxpayer (Art. 26(I)), and only taxpayers under the standard regime take credits (Art. 47). If it opts for the standard regime, the CBS applies to all fees and amounts it charges unit owners and third parties (Art. 26, §2(I)). A specific rule applies when condominium fees are less than 80% of its total revenue (Art. 26, §2(II)).

Conclusion

The rate still depends on the Senate, but the logic of the CBS is already in the law: a client under the standard regime recovers the CBS as a credit, and payroll generates no credit. For outsourcing companies, this calls for prices recalculated per contract and per type of client. If your company is also reviewing schedules and prices because of the new working-hours rules, see Brazil ends the 6x1 schedule: the Amendment 141 timeline for HR and bring both changes to the same round of negotiations.

Calculating the CBS is a job for your accountants; operations provide the real cost of each contract. Need those numbers to review prices before 2027? Talk to the Tirvu team and see TIRVU+ working in your own operation, with time tracking, schedules and dashboards of costs by contract, site or team in one system.

Sources

This content is for informational purposes only and does not replace specialized legal, accounting or tax advice.

#CBS
#tax reform
#Complementary Law 214/2025
#public contracts
#pricing
#outsourcing

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