Preliminary ruling by the São Paulo Court of Justice excludes CBS/IBS from the ICMS tax base.

In a preliminary injunction granted by the Court of Justice of São Paulo, published on September 14, 2026, the company obtained the right not to include CBS and IBS in the ICMS tax base, as had been determined by the São Paulo State Department of Finance and Planning.

The new CBS and IBS taxation, established by EC 132/23 and LC 214/25 (Consumption Tax Reform), will be effectively charged starting January 1, 2027. The São Paulo State Finance Department (Sefaz-SP), in turn, has formally expressed its understanding, through Responses to Tax Consultations (such as No. 32,303/2025 and No. 33,083/2026), that the CBS and IBS values should be included in the ICMS tax base, as they comprise the "value of the transaction".

The court ruling acknowledged that:

• The interpretation of the São Paulo tax authorities violates the "principle of strict legality and closed typology of taxation" (provided for in Article 150, I of the Federal Constitution of 1988 and in Article 97, IV and §1 of the National Tax Code), which states that the definition or any alteration that makes the tax base more onerous must expressly depend on a law.
• Complementary Law 227/26, enacted to regulate the effects of the Tax Reform on the Kandir Law (LC 87/96 which regulates the ICMS), expressly added that, from January 1, 2027, only the amount corresponding to the Selective Tax will be included in the ICMS tax base.
• The tax authorities' attempt to include CBS and IBS in the ICMS tax base unduly expands taxation without support in national complementary law, and violates the principles of neutrality, simplicity, transparency, and the prohibition of "cascading" cumulative taxation.
• The amounts collected from IBS/CBS constitute revenue for the creditor federative entities, temporarily passing through the company's accounting, without representing a definitive commercial inflow or income from the goods sold.

Under these terms, the company obtained judicial recognition to calculate and collect ICMS (a Brazilian state sales tax) without including CBS/IBS (a Brazilian social contribution tax) in its tax base for as long as these taxes coexist.

Although the decision was issued on a preliminary basis, is subject to appeal, and only produces effects for the company that filed the lawsuit, it represents a relevant precedent and reinforces the legal grounds for other taxpayers to judicially seek the right to exclude CBS and IBS from the ICMS tax base. Given the financial impact of this inclusion, it is recommended that companies proactively assess the adoption of their own legal measures to eliminate the requirement starting in 2027, taking into account the specific characteristics of their operations.