Uncertainty remains over how Brazil will achieve fiscal repair amid rising mandatory spending and a slew of election promises, with investor nerves high due to Lula’s evolving policy team, including the choice of finance minister.

Looking ahead to 2027, those who diagnose impact, simulate scenarios, and adjust structures will gain a strategic edge as politics recedes and calculation takes center stage.

In September, Brazil approved a complementary law to bring tax arbitration into the National Tax Code and suspend enforceability of credits under a special law, but Brazil lacks a detailed implementing regime, unlike Portugal; companies with significant tax disputes should map cases suitable for this path.

Brazil’s presidential election produced Lula with about 52% of valid votes, and he will take office on January 5, 2027, signaling continuity for the proposed dual VAT reform—CBS at the federal level and IBS at the state/municipal level.

Lula’s advisers say he will target the primary surplus guidelines, aiming for an effective primary surplus of 1.3% of GDP by 2030, versus a projected 0.4% deficit this year.

For Brazilian businesses, the pressing question is not if reform happens but how to prepare across three fronts: cash-flow effects from timing and non-cumulativity, renegotiation of contract price clauses, and the use of credits (ICMS, PIS/Cofins) during the transition.

The speech will outline Lula’s broader economic and other priorities for his new term starting in January, rather than laying out specific measures.

Key policy details indicate CBS will be fully implemented in 2027, with ICMS and ISS phased out by 2033, while ongoing adjustments and debates over the split payment mechanism continue in Congress.

For Brazilians in Portugal and Portuguese investors with Brazil interests, the reform affects cross-border taxation, transfer pricing within groups, remittance costs, and corporate/estate structures; proactive planning now is cheaper than post-election adjustments under scrutiny.

Reelected President Lula is set to deliver a televised address reaffirming budget discipline, though without detailing specific policies, according to two anonymous sources.

Since Lula’s surprise reelection on October 25, Brazilian financial markets have faced pressure—currency weakness, falling stocks, and rising market rates—with some stabilization after favorable U.S. midterm results boosted risk appetite.