Setembro

Extraordinary International Tax Newsletter - Setembro 2024

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Pillar II - Brazil institutes minimum taxation of 15% on the profits of foreign multinational groups

Through Provisional Measure 1,262/2024 a minimum taxation of 15% is established on the profits of foreign multinationals in the country (groups with annual revenues exceeding Euros 750 million, in at least two of the last previous four years).
 
Taxation will be in the form of an additional Social Contribution on Net Profit (CSLL) and will come into force from January 1, 2025.
 
This change is part of the project to introduce global minimum taxation on large international companies and is part of Pillar II, an OECD project, inserted in the context of BEPS (Base Erosion and Profit Shifting), given the growing concern about abusive tax planning practices of large multinational groups regarding the movement of their profits to jurisdictions with reduced or no taxation.
 
PM 1,262/2024 provides the general guidelines for calculating the additional CSLL based on a series of adjustments to the accounting profit and taxes paid, variations calculated by the "Profit GloBE" (Global Anti-Base Erosion), which will serve as the basis for minimum taxation. If the effective rate calculated based on "GloBE Profit" is below 15%, the CSLL surcharge must be applied.
 
Failure to comply with obligations set out in the PM subjects companies to penalties ranging from 0.2% of revenue to 10%, limited to R$10 million, in addition to a 5% fine for omitted amounts.