{"id":81483,"date":"2026-09-18T19:23:07","date_gmt":"2026-09-18T22:23:07","guid":{"rendered":"https:\/\/a3aengenharia.com\/?post_type=articles&p=81483"},"modified":"2026-09-18T19:23:07","modified_gmt":"2026-09-18T22:23:07","slug":"split-payment-tax-reform-public-works-measurements-bdi","status":"publish","type":"articles","link":"https:\/\/a3aengenharia.com\/en-us\/content\/technical-articles\/split-payment-tax-reform-public-works-measurements-bdi\/","title":{"rendered":"Split Payment under Brazil\u2019s Tax Reform: Impacts on Public Works, Measurements, and BDI"},"content":{"rendered":"\n

Split payment under Brazil\u2019s Tax Reform is a collection mechanism in which IBS and CBS amounts may be segregated at the time of financial settlement of the transaction, before the full amount reaches the supplier. For public works, the effect should not be analyzed only as a tax matter: it changes the relationship among measurement, invoicing, cash actually received, appropriation of tax credits, financial expenses, and BDI formation.<\/p>\n\n\n\n

In September 2026, however, it is essential to distinguish the definitive legal architecture from the actual stage of implementation. Complementary Law No. 214\/2025, as amended by Complementary Law No. 227\/2026, regulates split payment in Articles 31 to 35 and provides for gradual implementation. The year 2026 remains a test year for IBS and CBS. In addition, the special allocation regime for government purchases provided for in Article 473 does not apply in full to taxable events occurring in 2026. Therefore, estimates, tender documents, and contracts need to record the reference year and avoid treating as currently effective an operating mechanism still subject to implementation and joint regulatory acts.<\/p>\n\n\n\n

What is split payment under Brazil\u2019s Tax Reform?<\/h2>\n\n\n\n

Split payment affects the financial mechanics of measurements and BDI, but it needs to be addressed within the complete planning, evaluation, and execution lifecycle. See What the TCU Reviews in Construction and Engineering Services Procurement<\/a>.<\/p>\n\n\n\n

Split payment is a method for settling IBS and CBS liabilities in which the portion corresponding to the taxes is segregated during financial settlement. Under the standard procedure, the payment transaction is linked to the fiscally documented operation, and the system checks the IBS and CBS amounts that still need to be settled before releasing funds to the supplier.<\/p>\n\n\n\n

The economic logic differs from a system in which the supplier receives the gross amount and pays the tax later.<\/p>\n\n\n\n

In simplified terms:<\/p>\n\n\n\n

  1. the transaction involving goods or services occurs;<\/li>
  2. the tax document identifies IBS and CBS;<\/li>
  3. payment is initiated;<\/li>
  4. the system checks the tax portion still due;<\/li>
  5. the applicable portion is segregated and collected;<\/li>
  6. the supplier receives the corresponding net amount;<\/li>
  7. any excess amounts follow the statutory refund or transfer procedures.<\/li><\/ol>\n\n\n\n

    The mechanism seeks to bring tax collection closer to the financial moment of the transaction, reducing mismatches between declared liability and tax actually paid.<\/p>\n\n\n\n

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    The effect of split payment does not end with the tax rate: it needs to be converted into cash flow, credits, financial expenses, and BDI.<\/strong> Modeling should start from the base date and the actual project schedule to separate nominal tax impact from effective economic impact.<\/p>\n\n\n

    Cost Engineering to review BDI, tax credits, and project cash flow<\/a><\/p>\n<\/div>\n\n\n\n

    Why split payment matters to Cost Engineering<\/h2>\n\n\n\n

    An estimate worksheet does not deal only with physical cost. It also needs to represent taxes, financial expenses, working capital, payment timing, and contracting conditions.<\/p>\n\n\n\n

    When part of the amount no longer passes through the contractor\u2019s cash account, the relationship between invoiced price and available funds changes.<\/p>\n\n\n\n

    Consider a hypothetical measurement of BRL 1,000,000. Under a model without segregation, the company may receive the contract amount and pay taxes according to the applicable system. Under a split-payment model, the tax portion may be separated within the financial flow. The gross measurement remains a contractual figure, but the funds actually available for payroll, suppliers, equipment, and working capital may be lower.<\/p>\n\n\n\n

    This difference affects:<\/p>\n\n\n\n