Brazil: Chamber of Deputies approves Bill of Law 3,817/24 that establishes the OECD Pillar Two global minimum tax in Brazil
In a summary
On December 17, 2024, the Brazilian Chamber of Deputies approved Bill of Law #3,817/24 (BL 3,817/24) that establishes the OECD Pillar Two global minimum tax in Brazil.
BL 3,817/24 adapts the Brazilian tax legislation to the OECD’s Global Base Erosion – GloBE Rules, introducing an effective minimum taxation of 15% through an additional Social Contribution on Net Profit (CSLL).
The next steps are the analysis of BL 3,817/24 by the Brazilian Senate and the approval by the President of the Republic.
More details
The new Brazilian global minimum tax of 15%, as introduced by BL 3,817/24, affects multinational groups falling within the scope of the OECD’s GloBE rules, i.e. those that have annual revenues of at least €750 million (seven hundred and fifty million euros) in the consolidated financial statements of the ultimate parent entity in at least two of the four fiscal years immediately preceding the year under review.
The rules are designed to ensure that the additional CSLL qualifies as a Qualified Domestic Minimum Top-up Tax (QDMTT) under the OECD Inclusive Framework, guaranteeing to Brazil the priority on the taxation of exceeding profits accrued by Brazilian entities and the ability to offset it against the tax paid abroad.
BL 3,817/24 expressly states that the new 15% CSLL surcharge will enter into force on 1 January 2025, pending regulation by the Brazilian IRS. In this context, it is possible that the new law be enacted still before the end of 2024.
The Brazilian Congress may vote BL 3,817/24 instead of Provisional Measure 1,262/24 (MP 1,262/24).
Unlike MP 1,262/24, article 40 of BL 3,817/24 establishes that the Executive Branch must submit to the National Congress, during the first half of the 2025 fiscal year, a legislative proposal aimed at reforming the Universal Basis Taxation (TBU) rules (articles 76 to 92 of Law 12,973/14), with a view to introducing the Income Inclusion Rule (IIR) in accordance with the guidelines of OECD Pillar Two rules and a CFC regime (Controlled Foreign Corporation Rules).
The CFC should be based on the following guidelines I – protection and prevention of the erosion of the tax base, especially through the transfer of profits between entities; II – international competition for Brazilian companies with productive investments abroad; III – the need to balance the precision of the rules with a reduction in the burden of administration and compliance, including the possibility of adopting objective criteria for determining the elements that make up the rule; and IV – the prevention or elimination of double taxation.
In recent articles we have discussed the main implications of the CSLL surcharge for multinationals under the new tax. Click to read: Forbes México and Bloomberg Law.
