ICMS credit desk
Many companies carry in their tax books a balance of ICMS (Brazil's state value-added tax) to recover that they cannot use, because they buy with tax and sell with little or no tax. With the end of ICMS in 2033, that balance gets its own rule: what exists on December 31, 2032 and is recognized by the state will be returned in installments, by offset against the new tax (IBS) or, as a last resort, in cash. The credit desk maps your balance, explains why it exists and puts your bookkeeping in a condition to be recognized.
Who it is for
For companies that accumulate ICMS credit and want to know the real size of the balance, where it comes from and how it can be used, transferred or recovered.
The credit desk is usually worth it if you:
- export or sell with an ICMS burden lower than that of your purchases, and the balance grows every month;
- bought machinery and equipment and track capital-goods credits;
- have a balance sitting for years and do not know whether its bookkeeping is in order;
- belong to a group and wonder whether one company's balance can be used by another;
- want to know what happens to the balance when ICMS ends.
The work is technical and tax-focused. The accountant remains responsible for the bookkeeping and tax filings. If any formal act needs to be challenged or filed on the company's behalf, it is carried out by a qualified professional you hire directly.
What a credit balance is, in plain language
With ICMS, a company subtracts from the tax it charges on sales the tax it paid on purchases. When what it paid on purchases is greater than what it charged on sales, a credit is left over: the credit balance. If there is no tax to offset in the following months, it stays accumulated.
This is common among exporters, because a sale abroad does not pay ICMS, but the credit on purchases still exists. Complementary Law 87/1996 (the Kandir Law, article 25) addresses this: for exporters, accumulated balances may be used by another establishment in the same state and, if anything is left, transferred to other taxpayers in the state, in proportion to the export sales and through a document from the authority recognizing the credit. In other cases, the law leaves the decision to each state. In general, the balance also grows with the credit on machinery and equipment, which is taken in 48 monthly installments, and with sales that carry less tax than purchases.
What changes with the end of ICMS
Constitutional Amendment 132/2023 (article 134 of the ADCT) and Complementary Law 227/2026 (articles 132 to 141) created a path for the balance that exists at the end of 2032. Instead of disappearing with the tax, it is recognized by the state, updated by the IPCA inflation index from February 1, 2033 and returned to the taxpayer.
In practice, the balance stops being just a number in the tax books and becomes a right with rules, deadlines and conditions. A company with organized bookkeeping reaches 2033 with a credit it can support. One without it risks seeing part of the balance challenged or not recognized.
What the law requires for the balance to be recognized
Under article 132 of Complementary Law 227/2026, the credit balance must meet four conditions at the same time:
- Be admitted by state lawThe credit must be accepted by the state legislation in force on December 31, 2032 and come from transactions made up to that date.
- Be booked and calculatedThe amount must be regularly calculated in the establishment's tax bookkeeping, even if the bookkeeping is done after December 31, 2032.
- Not have been usedThe balance must not have been offset or used by the company by December 31, 2032.
- Be approvedThe state must recognize the balance, through the approval request or through its failure to answer within the deadline.
The law also recognizes credits admitted after that date, including those from final administrative decisions or final court rulings in the taxpayer's favor.
The approval request and the deadlines
Approval (homologação) is requested from the state, and the request follows each state's legislation. The table shows the general deadlines in Complementary Law 227/2026.
| When | What happens |
|---|---|
| December 31, 2032 | Date on which the credit balance is measured for the transition regime. |
| February 1, 2033 | The balance starts to be updated by the IPCA, counted from December 2032. |
| Up to 5 years, counted from January 1, 2033 | Maximum period for the company to file the approval request with the state. |
| 24 months after filing | Period for the state to answer, extendable once by the same period when an audit is under way. If it does not answer, the balance is deemed approved. |
Source: Complementary Law 227/2026, articles 133 and 134. For capital-goods credits on assets received from January 1, 2029, the request follows its own rule, with the state answering within 60 days. Tacit approval does not prevent the state from still assessing differences while its right to do so has not lapsed.
How the approved balance returns to the company
Once approved, the balance can take different paths. Which of them are open in your case depends on the state's rules and on the company's tax standing:
- Offset against IBSThe balance is offset against the IBS owed by the company in 240 equal monthly installments, that is, over 20 years. Capital-goods credits follow whatever remains of the 48-month period.
- TransferThe holder may transfer the balance to companies in the same economic group or to third parties, who may use it only to offset ICMS in the state or IBS. The transfer is reported through an electronic tax document.
- Cash reimbursementIf offsetting is not possible, the IBS Steering Committee reimburses the amount in cash, also in 240 monthly installments.
- Offset against ICMSIf the state and the company agree, the approved balance may offset ICMS debts, according to state legislation.
Transfer and reimbursement depend on the company being in good standing with IBS and with the state's ICMS. Source: Complementary Law 227/2026, articles 135 to 140.
And before 2033? Your state's rule
Until 2032, the balance remains under today's rules, and they differ from state to state. Outside the exporter's case, Complementary Law 87/1996 leaves it to each state to decide whether to allow the balance to be used by another establishment or transferred to other taxpayers (article 25, paragraph 2). That is why the rules vary.
So the credit desk looks at the balance twice: at what your state allows you to do now and at what will be recognized in 2033. There is also a neighboring topic: a taxpayer holding goods in stock on December 31, 2032 that are subject to tax substitution may take a credit for the ICMS withheld, offsetting it in 12 installments against IBS, provided it takes the inventory (articles 142 to 144). For companies under the Simples Nacional regime, this path is different (article 145).
What changes from one balance to another
The examples below are illustrative: they show how the answer varies with the balance, not real client cases.
An exporter's balance
The credit comes from the difference between purchases with ICMS and sales abroad, which do not pay the tax. This is the case where federal law already offers a path for use.
Illustrative example: An exporter has accumulated a balance for years. The desk maps how much is free for use today in the state, how much can be transferred and what must be in order to be recognized in 2033.
A capital-goods balance
The credit on machinery and equipment is taken in 48 monthly installments, and the 2033 rule has its own deadline for it.
Illustrative example: A manufacturer bought equipment in recent years. The desk separates this credit from the rest, tracks what is still to be taken and lays the groundwork for the approval request.
A balance with incomplete bookkeeping
To be recognized, the balance must be calculated in the tax bookkeeping. Missing or wrong entries become a risk.
Illustrative example: A company finds differences between the book balance and the tax documents. The desk lists the causes and the corrections that can still be made, with the accountant, before the cutoff date arrives.
What we deliver
You receive a document to decide on, not a pile of spreadsheets. Each balance comes with the amount, the origin, the state of its bookkeeping and the source of the rule applied.
- Balance inventoryThe amount of the credit balance of each establishment and each state, reconciled with the tax bookkeeping.
- Causes of accumulationWhy the balance exists and grows, split by origin, such as exports, capital goods and lower tax on sales.
- Plan of use by stateThe options for use, transfer or reimbursement, according to each state's rule and the IBS transition rule.
- Preparation for approvalThe organization of documents and bookkeeping so the balance can be recognized by the state.
How it works
- 01
Conversation and balances. We understand in which states the company has a balance, where it comes from and what has already been tried. We agree on scope, timeline and price before starting.
- 02
Inventory. We reconcile the tax-book balance with the documents and split the credit by establishment, state and origin.
- 03
Causes and options. We explain why the balance accumulates and compare what the state allows today with what the transition provides.
- 04
Preparation and follow-up. We leave the documentation organized for approval and tell you when a rule changes.
Information based on Constitutional Amendment 132/2023 (ADCT article 134), Complementary Law 227/2026 (articles 132 to 145) and Complementary Law 87/1996 (articles 20 and 25). Rules on using the balance before 2033 and the approval procedure vary by state and may change; we confirm the situation in force at the time of the analysis. Updated on November 6, 2026.
Frequently asked questions
- Is my balance already worth money?
- Not necessarily. Today its use depends on your state's law. The reform's regime for recognition and return applies to the balance that exists on December 31, 2032 and is approved.
- How long until I receive the balance?
- If it is offset against IBS or reimbursed in cash, in 240 monthly installments, that is, 20 years. Capital-goods credits follow whatever remains of the 48 months. The balance is updated by the IPCA from February 2033.
- Is the state obliged to approve my balance?
- The state reviews the request under its own legislation. If it does not answer in time, the balance is deemed approved, but it may still assess differences later. That is why correct bookkeeping matters.
- Can I transfer the balance to another company in my group?
- The law allows the approved balance to be transferred to companies in the same group or to third parties, who may use it only to offset ICMS or IBS, and it requires the holder to be in good standing. Before 2033, the state's rule applies.
- Do I need to wait until 2033 to organize the balance?
- No. Regular bookkeeping is one of the conditions, and fixing gaps takes time. The sooner the balance is mapped, the more options you have to decide on.
- Who files the approval request?
- The company, before the state, through the procedure in state legislation. We organize the documents and the analysis. The accountant remains responsible for the bookkeeping, and formal acts of defense are hired by you directly from a qualified professional of your choice.
- Do you assure that the balance will be recognized or recovered?
- No. Recognition belongs to the state, and each state's rule may vary. We show where your balance stands under the rules in force, with sources and limits. The price of the work is agreed before we start.
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Tell us in which states your company accumulates credit. In a 30-minute conversation, we will say what needs to go into the analysis and whether the credit desk makes sense for your case.