Brazil’s corporate tax landscape is undergoing a significant shift following the enactment of Supplementary Law No. 224/2025. This new legislation increases the tax burden for companies operating under the Presumed Profit regime, a simplified taxation method widely utilized by Special Purpose Vehicles (SPVs) and mid-sized enterprises to streamline compliance. The change effectively raises the Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSL) by increasing the statutory profit presumption margins by 10% for the portion of annual gross revenue exceeding BRL 5 million.
While the government justifies this measure by framing the regime as a tax incentive, the Presumed Profit system is fundamentally a simplification tool designed for objective tax assessment under the National Tax Code. By assuming that higher revenue automatically equates to higher profitability, the new rule overlooks the economic realities of different industries and raises significant constitutional concerns. These legal weaknesses are expected to provide strong grounds for judicial challenges and tax litigation in the near future.
Due to constitutional notice requirements, the increased rates will become enforceable in January 2026 for IRPJ and April 2026 for CSL. Consequently, international investors with Brazilian subsidiaries under the Presumed Profit regime should immediately re-evaluate their 2026 financial projections and operational structures. It is highly recommended that stakeholders closely monitor legal developments and consider judicial remedies to mitigate the impact of this increased tax burden.