Corporate profits are taxed by two different, but nearly identical taxes: IRPJ (Corporate income tax – imposto de renda de pessoas jurídicas) and CSLL (Social contribution on net profit – contribuição social sobre o lucro líquido). These taxes are normally calculated simultaneously and their differences consist of minor variations on the tax base.

IRPJ applies at a 15% rate, plus an additional surtax of 10% for annual taxable income exceeding BRL 240,000.00, or quarterly taxable income exceeding BRL 60,000.00. The CSLL ordinarily applies on the adjusted net accounting profits of Brazilian companies at a general rate of 9%. The CSLL rate is increased to either 15% or 20% with respect to certain financial institutions. (see further details on the different regimes for computation of the tax base in Sec. 5.1. and a comparative calculation in Sec. 5.1.2.).

Federal Social Contributions on Revenues (PIS and COFINS)

In addition to the corporate tax, Brazil levies two taxes on gross revenues of corporate taxpayers. The PIS (Program of Social Integration) is intended to finance the unemployment insurance system and COFINS (Contribution for the Financing of Social Security) is collected to fund social security programmes in Brazil.

PIS is levied at the rate of 1.65% of the gross revenues with credit allowed for PIS paid on purchases to ensure that the tax is applied only once on the final value of each transaction. For certain taxpayers such as financial institutions, telecommunication companies, cooperatives, and companies using the ‘Presumed Profits’ regime, a reduced PIS rate of 0.65% applies without any credits. Whilst certain transactions like exports are exempt from PIS, in some cases reduced rates of 0% or 0.65% may apply depending on the nature of the transaction.

Similar to the PIS, the COFINS is levied at the rate of 7.6% of the gross revenues with credit allowed for COFINS paid on purchases to ensure that the tax is applied only once on the final value of each transaction. For certain taxpayers such as financial institutions, telecommunication companies, cooperatives, and companies using the presumed profits regime, a reduced COFINS rate of 3% applies without any credits. Whilst certain transactions like exports are exempt from COFINS, in some cases reduced rates ranging from 0% to 4% may apply depending on the nature of the transaction.

PIS and COFINS are also levied on importation of goods in Brazil and are generally applied at a combined rate of 11.75% (2.1% for PIS and 9.65% for COFINS) (see Sec. 12.).

Pillar Two Global Minimum Tax

On 20 December 2021, the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) released model rules called Global Anti-Base Erosion (GloBE). These rules basically provide for a co-ordinated system of taxation that is intended to reform international tax rules and ensure that large multinational enterprise (MNE) groups pay a minimum level of tax on the income arising in each of the jurisdictions where they operate.

Essentially, the Pillar Two rules provide for the implementation of an Income Inclusion Rule (IIR) and an Undertaxed Profits Rule (UTPR) with respect to in-scope MNEs, being those with annual consolidated revenues of EUR 750 million or more in at least two of the four fiscal years immediately preceding the tested fiscal year. Under the Pillar Two rules, taxpayers in scope of the rules are required to calculate their effective tax rate for each jurisdiction where they operate, and pay Top-up tax for the difference between their effective tax rate per jurisdiction and the 15% minimum rate. Any resulting Top-up tax is generally charged in the jurisdiction of the ultimate parent of the MNE. Further, the Pillar Two rules also allow jurisdictions to opt for the adoption of a Qualified Domestic Minimum Top-up Tax (QDMTT) based on the GloBE mechanics, thus eliminating the potential application by other jurisdictions of top-up taxes to their resident entities.

On 18 December 2024, Brazil’s National Congress approved the Bill of law 3,817 to implement the Pillar Two regulations in Brazil. The bill closely follows the Provisional Measure published on 3 October 2024 introducing an Additional Social Contribution on Net Profit (Adicional da CSLL) that is meant to meet the requirements of the Qualified Domestic Minimum Top-Up Tax (QDMTT) under the GloBE rules. The final text was gazetted as Law No. 15.079 on 30 December 2024, whilst a previously issued Normative Instruction of 3 October 2024 details the practical QDMTT implementation rules.

Brazil opted not to implement an IIR or UTPR at this stage. Nevertheless, Law No. 15.079 provides for the possibility to submit legislative proposals to that end in the future

The Additional CSLL applies from accounting periods opened on or after 1 January 2025 to in-scope resident companies in Brazil, being members of MNE Groups with a consolidated accounting revenue of EUR 750 million or more in at least two of the four fiscal years immediately preceding the fiscal year under review, such that the effective tax rate in Brazil is at least 15%.

As per the Normative Instructions, the following entities are excluded:

Government entities, international organizations, non-profit organizations, and pension funds;
Investment funds and real estate investment vehicles but only when they are the UPE of an MNE Group; and
Entities directly or indirectly owned by the above-mentioned entities.

Transitional Safe Harbor

Brazil adopted transitional safe harbor rules applicable to fiscal years beginning on or before 31 December 2026 but ending before 1 July 2028. Under the rules, the Top-up tax is set at zero if any one of the following three tests is met:

De-minimis test: Total revenue of less than EUR 10 million and profit or loss before income tax of less than EUR 1 million;
Simplified ETR test: The ETR is equal to or greater than 16% (in 2025), or 17% (in 2026); or
Routine profits test: The profit or loss before income tax is equal to or less than the substance-based income exclusion (SBIE) amount.

The safe harbors follow the GloBE’s “once out always out” approach, meaning that a taxpayer who fails to qualify for the safe harbors in year 1 is barred from using the safe harbors thereafter.

Payment of Adicional da CSLL and Filings

The Top-up Tax due must be paid by the constituent entity by the last business day of the seventh month following the end of the fiscal year.

The constituent entities must provide all the information necessary for the calculation of the additional CSLL. Where an MNE group has multiple constituent entities in Brazil, one of the constituent entities can be appointed as the reporting constituent entity. The due date for filings is expected to be provided through a Normative Act.

Alternative Minimum Tax

There is no alternative minimum tax in Brazil.

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