Law No. 15,079, published on December 30, 2024, establishes an additional value of 15% of Social Contribution on Net Income (CSLL), applicable to multinational companies established in Brazil with consolidated annual revenue exceeding € 750 million (approximately BRL 4.8 billion).
This law aims to align Brazil with the OECDs global guidelines and standards to combat tax base erosion and profit shifting, consolidating significant changes in relation to Provisional Measure No. 1,262/2024.
The international standard incorporated is the Qualified Domestic Minimum Top-up Tax (QDMTT), which seeks to establish an adequate minimum effective domestic taxation for large companies, preventing supplementary taxes on profits earned in Brazil from being charged in other jurisdictions through mechanisms such as the Income Inclusion Rule (IIR), if the country that hosts the multinational group invests in Brazil or, subsidiarily, the Undertaxed Payments Rule (UTPR), which attracts taxation to any country where the multinational group operates that has Pillar 2 rules in force.
The Brazilian Federal Revenue Service (RFB) justified that the choice of CSLL as a mechanism for implementing the QDMTT is due to its less rigid constitutional structure compared to income tax. However, on the other side, it is known that the revenues from the CSLL Additional value will be allocated exclusively to the Union, unlike the IRPJ, which must be shared with the States and Municipalities.
The aforementioned Provisional Measure had already been subject to regulation through RFB Normative Instruction No. 2,228/2024. The day after the publication of the Law, RFB Normative Instruction No. 2,245 was published to amend Normative Instruction 2,228 just to adapt the legal basis.
Updates and Changes in Concepts in relation to the MP
Law No. 15,079/2024 introduces a rule that guarantees predictability to the taxpayer in relation to conceptual changes that impact the tax burden. Any update that results in an increase will be applied:
- To the fiscal year beginning in the year following publication, or
- 90 days after publication, respecting the principle that the law that creates or increases a tax can enter into force only in the following year or after 90 days. This provision is provided for in Article 3, § 5 of the PL, promoting greater legal certainty and alignment with constitutional principles.
Temporary Differences in Adjusted Covered Taxes
The treatment of temporary differences is further detailed in Art. 13 and Art. 28 of the Law. These provisions cover global adjustments, providing that temporary differences are reflected directly in the current tax expense of the same fiscal year, instead of accumulating deferred balances for future periods. This change adds greater certainty and accuracy to tax calculations.
Penalties
Law No. 15,079/2024 toughens the penalties associated with tax violations, with the following provisions in Art. 35:
- Fine for delay or failure to submit information: 0.2% per calendar month or fraction thereof, limited to 10% and a ceiling of BRL 5 million (reduced from the previous limit of BRL 10 million).
- Fine for inaccuracy or omission: 5% of the omitted or incorrect amount, with a minimum of BRL 20 thousand and a maximum also limited to BRL 5 million, expanding the scope of penalties that previously had no ceiling in the MP No. 1,262/2024.
Tax Incentives
Art. 37 of Law No. 15,079/2024 introduces provisions for greater flexibility in the use of tax credits of incentives related to the areas of the Superintendence for the Development of the Northeast (Sudene) and the Superintendence for the Development of the Amazon (Sudam), as well as a reduction of thirty percent (30%) for projects in sectors of the economy that are considered, in an act of the Executive Branch, to be priorities for regional development:
- Tax credits may be offset against the taxpayers own debts, whether due or still not due, as long as they are administered by the Brazilian Federal Revenue Service (RFB).
- Alternatively, taxpayers may request reimbursement of credits in cash, in compliance with applicable legal procedures.
The procedures for operationalizing these Qualified Refundable Tax Credits still need to be clarified.
Validity of Universal Basis Taxation (TBU) Rules
As provided for in Art. 39, the validity of the TBU rules was extended to the calendar year 2029, extending the term previously scheduled to end in 2024. This extension, incorporated during the legislative process, reflects the commitment to a smooth transition to global tax rules.
Legislative Proposal for the Reform of the TBU and Introduction of the Income Inclusion Rule (IIR)
Art. 40 of the Law establishes that the Executive Branch must, by the first half of 2025, present a legislative proposal to the National Congress to reform the TBU rules. The proposal will include the implementation of the Income Inclusion Rule (IIR), aligning Brazil with Pillar 2 of the OECD.
See below the main points and concepts of minimum taxation introduced into the Brazilian legal system:
| Who will be impacted | Multinational groups with annual revenue exceeding 750 million euros in at least 2 of the 4 years immediately preceding the year being analyzed |
| Validity | From 01/01/2025 |
| Who should pay? | The CSLL additional value will be due: (i) by Brazilian constituent entities in proportion to the result of multiplying their Excess Profits by the positive difference between 15% and their Effective Tax Rate; (ii) if it is not possible to implement hypothesis (i), the additional value must be distributed among the entities based on their net equity; (iii) at the option of the multinational group, the additional value may be allocated to a single entity. In this case, the other entities will be jointly and severally liable. |
| Calculation and Payment | Taxpayers must calculate and pay the CSLL Additional value by the last day of the 7th month following the end of the fiscal year. |
| Penalties and reductions | Penalties: (i) Failure to submit or delay - 0.2% of total revenue of the year per month of delay, limited to 10% or BRL 10 million; (ii) Presentation with omitted, inaccurate or incorrect value - 5% of the value, not less than BRL 20 thousand. Reductions: 90%: correction within 30 days; 75%: correction within 60 days; 50%: after 60 days, but before the notification; 25%: within the period set in the notification. No fine will be due if there is a correction before the notification. 50%: within the period set in the notification |
| Financial credit related to regional incentives |
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| Adjusted Covered Taxes | Those recorded in the financial statements of a constituent entity relating to income or profit, including equity interests; taxes levied in lieu of taxes on corporate income or profit; and taxes levied on retained earnings or equity, including taxes applied to multiple components based on these criteria. On the other hand, the CSLL additional value, unqualified imputable taxes, and taxes paid by insurance companies on returns to policyholders are not considered covered taxes. |
| GloBE Net Income Concept | Net Accounting Profit or Loss of the fiscal year of the Constituent Entity, adjusted by revenues and expenses expressly listed in the Normative Instruction and in accordance with the accounting standards applicable to Brazilian companies, including adjustments based on substance. |
| Exclusion based on substance | Exclusion to be made in the determination of Globes Net Income, calculated on a presumptive basis by applying certain percentages to eligible payroll costs and the book value of intangible assets. |
| Calculation basis for the additional value | The additional value will be applied to the income or profit recorded in the financial statements of the constituent entities of the multinational group. This includes both profits directly earned in Brazil and profits from ownership interest in other entities abroad, when applicable. GloBE Net Income = (GloBE Income of all Constituent Entities - GloBE Loss of all Constituent Entities) |
Brazils convergence with OECD standards brings with it the constant need for monitoring by professionals from numerous areas, especially tax. For this reason, the Tax team of Azevedo Sette Advogados is available to provide further clarification on the subject.