On October 3, 2024, Brazil introduced Medida Provisória No. 1.262, aligning its tax regulations with the OECD’s Global Anti-Base Erosion (GloBE) Rules. This is part of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS), which establishes a minimum effective tax rate (ETR) of 15% for large multinational enterprises (MNEs).


Key Features of the Legislation:

  • Adoption of a 15% Minimum ETR: The legislation introduces an additional Contribuição Social sobre o Lucro Líquido (CSLL) to ensure that MNEs operating in Brazil meet the 15% minimum effective tax rate on global profits, as required by the OECD’s GloBE rules.
  • Scope: The rules apply to Multinational Groups with entities in Brazil and with annual consolidated revenues of €750 million or more, making these groups subject to the GloBE minimum tax regulations, similar to those implemented in other G20 and OECD countries.
  • Calculation of the Effective Tax Rate (ETR): The ETR is calculated as the ratio of Adjusted Covered Taxes (taxes paid on income and profits) to GloBE Income (global book profits), expressed as a percentage. If the ETR in a particular jurisdiction is below 15%, the difference will be collected through an additional CSLL in Brazil. The formula for calculating the Additional CSLL in Brazil is: Additional CSLL = (15% - ETR) x GloBE Income (in Brazil).


Key Takeaways:

  • Government Initiative: Unusually, the Brazilian government has issued both the executive order (Provisional Measure) and specific regulations simultaneously, indicating a strong commitment to getting this approved swiftly.
  • Legislative Process: The Provisional Measure must be approved by Congress. If passed in 2024, these rules will take effect on January 1, 2025.
  • OECD Guidelines: OECD commentary and guidelines have been included as interpretation framework for the new rules.
  • Impact on MNEs: Multinational corporations (MNCs) with business in Brazil will need to reassess their Effective Tax Rate (ETR), as calculated under the new provisions.
  • Impact on Tax Incentives and Planning Strategies: Several tax incentives and planning strategies widely utilized in Brazil may be significantly affected, including:
  • SUDENE/SUDAM incentives,
  • Goodwill amortization,
  • Interest on Net Equity (INE),
  • R&D incentives,
  • New government grant tax credit mechanisms.


Link to the Provisional Measure here: https://www.in.gov.br/web/dou/-/medida-provisoria-n-1.262-de-3-de-outubro-de-2024-58815820