O split payment It is one of the key changes in Brazil's tax reform and will require companies of all sizes to adapt their financial and tax processes.
In practice, split payment changes the way consumption taxes are collected. Instead of the supplier receiving the full amount of the sale and then remitting the taxes to the government, the payment will go directly to the tax authorities at the at the time the transaction is settled.
This change affects everything from the financial sector to the issuance of invoices, including ERP, cash management, bank reconciliation, tax management, and relationships with customers and suppliers.
In this article, you'll learn how split payment works, which companies will be affected, what the main challenges are, and, most importantly, how to prepare your company to operate safely in this new environment.
What is split payment?
O split payment It is a mechanism created as part of the Tax Reform to facilitate the payment of the CBS (Contribution on Goods and Services) and GST (Goods and Services Tax).
Literally translated, the name means “installment payment.”. Therefore, instead of the entire amount paid by the buyer being transferred to the seller, the portion corresponding to taxes will be automatically set aside during the transaction.
To put it simply, imagine a sale of 10,000 R$ units.
Under the current model, the customer pays R$ 10,000 to the seller, who then calculates and remits the applicable taxes.
With split payment, the cash flow may work differently:
- Part of the payment goes directly to the seller;
- Another portion is automatically allocated to the public treasury;
- The buyer's tax credit is recognized almost immediately.
The goal is to reduce tax delinquency, combat fraud, curb tax evasion, and make the use of tax credits more efficient within the model of the Dual VAT.
Why was split payment created?
A Tax reform One of its goals is to reduce the cumulative effect of taxes and make the system more transparent.
Today, one of the major problems facing the government is that some companies collect amounts from customers that correspond to taxes but fail to remit those amounts later.
This results in:
- Unfair competition;
- Increase in tax evasion;
- Difficulties in using tax credits;
- Legal uncertainty.
With the split payment, collection occurs practically at the time of the transaction's financial settlement, significantly reducing this risk.
In addition, the system facilitates the operation of the financial credit system adopted by the IBS and by the CBS, since the buyer will have greater assurance that the tax was actually paid.
How will split payment work in practice?
Although many operational details are still being worked out, the general framework has already been established.
In a commercial transaction, The process will basically consist of the following steps:
- The company issues the invoice as usual.
- The system identifies the amount corresponding to the IBS and the CBS.
- The buyer makes the payment.
- The financial system automatically separates the amounts.
- The portion corresponding to taxes goes to the government.
- The seller receives only the net amount of the transaction.
In practice, close integration will be required between:
- Ticket-issuing systems;
- Payment methods;
- Financial institutions;
- Government platforms;
- Enterprise Resource Planning (ERP) systems.
The higher a company's level of automation, the smaller the operational impact tends to be.
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Which companies will be affected by split payment?
All companies subject to the IBS and CBS will have to deal with the split payment.
This includes organizations from a wide variety of sectors, such as:
- Industry;
- Trade;
- Provision of services;
- Importers;
- Distributors;
- Wholesalers;
- Technology companies;
- E-commerce;
In addition, businesses operating in the B2B market should closely monitor regulatory developments, as the ability to utilize tax credits will be a key factor in competitiveness.
How can you prepare your company for split payment?
Preparations should begin well before the requirement takes effect. Companies that start this transition early will have more time to refine processes, test systems, and train their teams.
Check out the key initiatives.
1. Assess your current processes
The first step is to understand how your company currently operates.
Map:
- Issuing invoices;
- Billing process;
- Accounts receivable;
- Accounts payable;
- Bank reconciliation;
- Tax assessment;
- System integration.
This survey will help identify bottlenecks that could hinder the adoption of split payment.
2. Review your ERP
Not all current systems are equipped to meet the new requirements of the Tax reform.
So, talk to your ERP vendor right away to verify:
- Update schedule;
- Integration with payment methods;
- Compliance with the IBS;
- Compliance with CBS;
- Generation of new tax documents;
- Control of tax credits.
Companies that use very outdated systems may need to migrate to more modern platforms.
3. Update the financial processes
O cash flow will undergo significant changes. Today, many companies use the total amount received from sales to manage working capital until the tax payment deadline.
With split payment, part of those funds may not end up in the company's cash flow.
Therefore, it will be necessary to review:
- Financial projections;
- Working capital;
- Financing needs;
- Liquidity management;
- Receiving Policies.
The sooner this simulation is conducted, the smaller the future impact will be.
4. Review contracts
The commercial contracts They may also need to be adjusted. It’s worth checking the clauses related to:
- Payment method;
- Withholdings;
- Revenue;
- Adjustments;
- Tax liability;
- Financial deadlines.
This review helps prevent conflicts between customers and suppliers during the transition.
How can advisory accounting help?
A Implementation of split payment It goes far beyond simply updating tax laws. It requires planning, reviewing processes, and constantly monitoring regulations that have yet to be published.
In this context, having a advisory accounting makes all the difference. In addition to ensuring tax compliance, specialized consulting services can:
- Assess the specific impacts on your business;
- Review tax planning;
- Guide the adaptation of systems;
- Assist in reorganizing the cash flow.
For medium- and large-sized companies, this support becomes even more strategic, because Minor operational glitches can result in high costs or compromise financial efficiency.
Don't wait until the last minute—start preparing your business with the help of our team of accountants! Click on the WhatsApp button and contact us!
