Brazil’s tax reform gives the licensing of musical works and phonograms a 60 percent cut in the new IBS and CBS rates, but only when that licence attaches to one of eight categories of national production, and a streaming service is not one of them.
IBS means Imposto sobre Bens e Serviços, the new shared state and municipal VAT. CBS means Contribuição Social sobre Bens e Serviços, its federal twin. They replace ISS, ICMS, PIS, Cofins and IPI by 2033. The text is Lei Complementar 214/2025, rewritten in places by Lei Complementar 227/2026, sanctioned on 13 January 2026 and analysed by Mattos Filho.
What sits inside the 60 percent band
Article 139 cuts both taxes by 60 percent on the items listed in Annex X when they relate to national theatre and dance shows, musical shows, carnival parades, academic events, trade fairs, exhibitions, audiovisual programmes including series, novelas and music videos, and artworks.
Annex X is a list of NBS codes. NBS means Nomenclatura Brasileira de Serviços, the classification that goes on the electronic invoice. Four entries matter here:
- Item 8, licensing of rights in musical works and phonograms, NBS 1.1103.4.
- Item 15, temporary assignment of those rights, NBS 1.1106.4.
- Item 19, definitive assignment, NBS 1.1107.40.00.
- Item 23, studio recording services supplied directly to national productions, NBS 1.2501.11.00.
The Finance Ministry’s estimate for the combined reference rate is roughly 26.5 percent, split 17.7 for IBS and 8.8 for CBS, per its reference-rate presentation. A 60 percent reduction puts a qualifying sync licence near 10.6 percent.
The nationality test is in the paragraph, not the annex
Article 139, paragraph 1, limits the reduction for theatre, musical shows, carnival parades and audiovisual programmes to productions made in Brazil that mainly contain works by Brazilian authors, or are mainly performed by Brazilian artists.
A São Paulo composer scoring a foreign series invoices that NBS code at the full rate. The same composer scoring a domestic novela invoices at 40 percent of it. The service code does not change. The production it attaches to does.
Recordings already had an older shield
Article 9, item V, carries the constitutional music immunity created by Emenda Constitucional 75 of 2013 into the new taxes. Phonograms and music videos made in Brazil containing works by Brazilian authors, or performed by Brazilian artists, are immune, as are the physical carriers and digital files that contain them.
That wording is built around supplying a recording. It says nothing about the licence to stream one, which is why the treatment of a DSP royalty line is still argued rather than settled.
The export test decides most catalogue income
Article 80 defines exporting a service or intangible good, rights included, as supply to a party domiciled abroad and consumption abroad. Exports are immune under article 8.
Both halves have to hold. A Brazilian label paid by a foreign DSP entity for plays by Brazilian listeners has the foreign counterparty and the domestic consumption. That gap is the 2027 argument, and it rhymes with what happens when Brazil treats streaming as a public performance.
2026 is a filing year, not a paying year
Article 343 sets IBS at 0.1 percent for 2026 and article 346 sets CBS at 0.9 percent. Article 348, paragraph 1, waives collection outright for taxpayers who file the ancillary obligations, and item III(c) exempts Simples Nacional businesses entirely.
Article 26, item IV, goes further. An individual earning under half the MEI ceiling, R$40,500 against a ceiling frozen at R$81,000 since 2018, is not an IBS or CBS taxpayer at all.
Three things to fix before 2027
- Put the correct Annex X NBS code on every rights invoice now, while the rate is 1 percent and errors are cheap.
- Record which production each licence attaches to, plus the author and performer nationality split. Nobody reconstructs that later.
- Separate domestic and foreign counterparty income in royalty accounting. Export immunity turns on where consumption happens.
None of this changes what a Brazilian stream is worth. It changes how much survives the invoice. Labels need reporting that carries counterparty jurisdiction and licence type per line, not one aggregated royalty figure. See also our rundown of distribution platforms for Brazilian artists.
