Brazil’s tax legislation aligned with OECD Pillar Two rules

The provisional measure, published on October 3, 2024, seeks to introduce a global minimum tax that complies with the OECD’s Pillar Two Global Anti-Base Erosion (GLoBE) rules. These rules aim to ensure that large MNEs pay a minimum level of tax on the income arising in each of the jurisdictions where they operate.

The rules of the provisional measure are therefore structured to ensure that the CSLL qualifies as a qualified domestic minimum top-up tax, thereby aligning with the GLoBE rules. The legislation provides that the regulations must be updated when necessary to comply with any OECD guidelines and procedures. It does not include an income inclusion rule or under-taxed profit rule.

The tax will apply to MNEs with an annual revenue of EUR750 million or more in the consolidated financial statement of their ultimate parent entity in at least two of the four years preceding the tax year. The CSLL will apply from January 2025, subject to approval by congress within 120 days of publication.

The normative instruction regulates the CSLL and establishes the mechanisms for calculating GloBE income and the top-up tax calculation. It also puts in place procedures for the implementation of the rules in the provisional measure.

The normative instruction will also come into effect from January 2025. It is currently open to public consultation until November 10, 2024.

Sources

• Tauil Chequer
• BDO
• Trench Rossi Watanabe
• Brazilian legislature (legislation, Portuguese)