Split Payment: How to Prepare Cash Flow for Tax Reform

Split Payment is the mechanism that automatically separates IBS and CBS at the time of financial settlement and directs these taxes to government accounts, changing the traditional model in which a company receives the full value of the sale and remits the tax later. For companies, CFOs, controllers, and finance managers, this directly affects cash flow, working capital, and the way processes, systems, and tax credits are managed.

As implementation will be gradual, anticipating these effects is essential to avoid cash flow pressure and reorganize financial operations in advance. Throughout this content, you will learn how Split Payment works, when it comes into force, what impacts it brings to financial and tax routines, and how to prepare for this transition with specialized support.

What Changes with Split Payment?

Today, when a company sells a product or service, it receives the full value of the transaction and remits taxes later, within the deadline established by law. With Split Payment, the financial settlement process is reversed: the automatic segregation of the tax and contribution eliminates manual remittance and reduces human error. The model is part of the consumption tax reform, with IBS as the tax on goods and services and CBS applying to goods and services as a federal contribution. At the time of financial settlement, the institution responsible for the payment automatically separates the IBS and CBS portion and sends it directly to government accounts, but the mandatory adoption of the model depends on the integration of each payment method with the public platform. The seller receives the transaction amount minus the IBS and CBS amount segregated during payment, and this implementation also depends on the connection of approximately 200 financial institutions to the operational ecosystem, with effects on tax collection.

This mechanism was established by LC 214/2025 and regulated, within the CBS framework, by Decree No. 12,955/2026, with technical acts and documents published by the Federal Revenue Service and the IBS Management Committee throughout 2026.

What Is the Actual Timeline?

There is considerable misinformation about when Split Payment will actually take effect. The implementation scenario, still subject to technical and regulatory definitions, is as follows:

• 2026: first phase of split payment testing, including IBS and CBS tests, as well as technical adjustments to electronic tax documents, with rates of 0.1% for IBS and 0.9% for CBS. The exemption from tax collection is linked to compliance with ancillary obligations, subject to the rules of the adaptation period.
• 2027: expected beginning of gradual and optional use in business-to-business (B2B) transactions, subject to operational definitions, in the year when CBS collection begins as a contribution replacing PIS and Cofins, together with IBS forming the dual VAT model established under Constitutional Amendment 132/2023 and the new consumption tax framework.
• Mandatory adoption: progressive implementation according to regulatory acts, measures issued by the competent authorities, and the availability of payment methods, with no general start date established in the regulations reviewed, as progress depends on how each payment method is integrated.

Before 2027, companies should map tax obligations, electronic invoices, NF documents, and new fields.

In other words, Split Payment does not begin abruptly on a single date. It is built in stages, and it is precisely this gradual transition that makes early preparation more strategic than reactive, including in relation to system requirements, tax authority validations, and document management routines. Under the regulatory design, the reimbursement of overpaid taxes must be agile and predictable to avoid operational distortions.

Why the Impact on Companies’ Cash Flow Is the Central Issue

When the tax amount no longer passes through the company’s cash account, the company loses temporary access to those funds, something that many operations currently use, even informally, as part of their working capital between receiving payment from a sale and remitting taxes. This may require additional working capital in certain operations.

This requires companies to rethink three financial areas:

1. Working capital projections. The amount of cash available in the short term changes when taxes are automatically removed from the equation, requiring financial planning to measure the impact on profit margins and the net tax burden.
2. Commercial terms and conditions. Negotiations with customers and suppliers must take into account that the net amount received will be lower than the total invoice amount, and changes in the tax base, rates, and withholding parameters may affect pricing.
3. Tax credit utilization. By collecting the tax during financial settlement, the mechanism may facilitate the use of IBS/CBS credits by the buyer, subject to legal requirements, and help reduce part of the cash flow impact without eliminating entitlement to tax credits or credits under the non-cumulative logic of the consumption tax, structured as a value-added tax.

The lack of operational transparency may reinforce the logic of advance tax payments and reduce cash flow predictability.

Where Does BTO Fit In?

A common mistake is to treat Split Payment as a purely technical issue that can be solved through an ERP update. In practice, effective preparation requires operational reengineering and adaptation to the new tax system environment, not just system configuration:

• Redesigning projected cash flow, incorporating scenarios both with and without temporary access to tax amounts.
• ERP configuration so that the system can properly identify and reconcile credits linked to invoices, review new fields and service rules, and monitor the conditions for credit utilization, preventing the loss of tax benefits.
• Continuous governance, since the mandatory implementation schedule still depends on future regulations. Companies need a model that adapts as each phase comes into effect, rather than a one-time adjustment, considering the regulatory transition led by entities such as the government, the Federal Revenue Service, the IBS Management Committee, and the Federal District.
• This is precisely the role of BTO (Business Transformation Outsourcing): preparing the company’s financial and operational structure to absorb the change as it becomes mandatory, rather than scrambling to adapt once the obligation is already in force. Having a partner alongside the organization also supports gradual adoption and reduces operational risks.

How Should a Company Begin Preparing?

The first step is to map how current cash flow depends on the period between receiving sales payments and remitting taxes, and to simulate the impact of reducing that margin. From there, process adjustments and ERP configuration can be prioritized before mandatory adoption, including mapping Simples Nacional requirements where applicable and reviewing the impact on taxes and payments.

How H&CO Supports This Preparation

H&CO acts as a Business Transformation Outsourcing partner for companies that need to anticipate the financial effects of Split Payment. The work combines financial process redesign, system configuration aligned with current Technical Notes, and continuous monitoring of the regulatory timeline, helping reduce errors, support accurate tax collection, and adapt to the new tax environment. This enables CFOs and controllers to reach the mandatory implementation phase with an already adjusted cash flow structure, rather than reacting after the change is in effect.