As part of an effort to align Brazil’s tax policy with global standards, the government has implemented new rules targeting the taxation of multinational companies, aiming to combat tax evasion and protect national revenue. On October 3, 2024, Provisional Measure No. 1,262/24 and Normative Instruction RFB No. 2,228/24 were issued, with the goal of aligning Brazil’s taxation with the international standard established by the OECD’s Pillar Two Global Anti-Base Erosion (GloBE). The new rules complement the Social Contribution on Net Income (CSLL), as provided in the provisional measure.
The taxation applies to multinational enterprises (MNEs) with annual revenue equal to or exceeding EUR 750 million in their financial statements, requiring a minimum 15% income tax if the effective tax on profits falls below this rate. Provisional Measure No. 1,262/24 allows Brazil to tax amounts that would otherwise be collected by other countries, thereby preventing tax evasion to foreign jurisdictions. Normative Instruction No. 2,228/24 supports this by defining the mechanisms for GloBE revenue calculation and the additional tax.
According to the Brazilian government, the new criteria will affect around 957 business groups with operations in the country. The Social Contribution on Net Income (CSLL) is part of Brazil’s effort to adapt to the OECD’s Global Anti-Base Erosion (GloBE) Rules, a global initiative supported by the G20 with adherence from approximately 140 countries. This measure, described as defensive, ensures that taxes are collected in Brazil rather than solely in the multinational’s home country. It also aims to encourage the restructuring of tax incentives, prompting them to be redesigned as financial credits.
The CSLL measure requires approval from the National Congress within 120 days of publication, and if passed, it will take effect in January 2025, along with the provisions of Normative Instruction No. 2,228/24, which is open for public consultation until November 10, 2024. This regulation is part of a series of initiatives Brazil has been advancing to modernize and strengthen its tax system, aligning it with global standards.
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Published on November 11, 2024