Corporate Accounting & Taxation in Brazil: Guide for Global Businesses

Brazil is Latin America’s largest economy and an increasingly strategic destination for global businesses seeking growth in the region. For multinational companies planning to establish or expand operations in Brazil, a clear understanding of the corporate accounting and tax environment is essential. The country’s tax system is known for its complexity, but recent reforms and international alignment efforts are gradually improving transparency and compliance. 

Table of Contents

1. Corporate Tax Structure in Brazil 
2. Other Taxes 
3. What will the new VAT system be like?
4. Legal Framework for Corporate Accounting 
5. SPED: Brazil’s Digital Bookkeeping System 
6. Recent Changes in Transfer Pricing Rules 
7. Implementation of the Global Minimum Tax 
8. Permanent Establishment and Withholding Taxes 

Corporate Tax Structure in Brazil 

Brazil’s corporate tax system includes two core components: the Corporate Income Tax (IRPJ) and the Social Contribution on Net Profit (CSLL). Together, these form the basis of the country's tax burden on legal entities. 

The IRPJ is levied at a base rate of 15%. An additional 10% surcharge applies to companies whose annual taxable income exceeds BRL 240,000 (approximately USD 48,000). The CSLL is calculated as a percentage of net profit and varies by industry. In 2025, the government increased the CSLL rates temporarily to strengthen public finances. Financial institutions now face a CSLL rate of 22%, while insurance companies and securities firms are subject to a 16% rate. For most other companies, the rate is 10%. 

Legal entities are subject to CSLL at the rate of 9% (except for some prescribed entities, such as financial institutions and private insurance companies, which are taxed at higher rates), which is not deductible for IRPJ purposes. The tax base is the profit before income tax, after some adjustments, depending on the calculation method (i.e., APM or PPM). 

Corporate income tax (IRPJ) is assessed at the fixed rate of 15% on annual taxable income, using either the 'actual profits' method (APM) or the 'presumed profits' method (PPM) 

These adjustments result in an effective combined corporate tax rate of approximately 34% for standard businesses, and up to 47% for banks. According to Brazil’s current Ministry of Finance, these increased CSLL rates are expected to remain in place through the end of 2025, with a scheduled reversion in 2026. 

>> Read: Doing Business in Brazil page

Other Taxes 

Value-added tax (VAT) 

The Brazilian indirect tax system is complex and has been subject to multiple changes over the past years. The text below contains general information applicable to each of the taxes mentioned herein. It is important to note that the respective legislation includes various exceptions to the general stated rules. In the case of the state VAT (ICMS), although a federal law should be followed, each state issues its own legislation, which brings certain differences when compared to the federal law. 

The Brazilian indirect tax system comprises three key indirect taxes: 

• VAT on Sales and certain Services (ICMS) 

• Excise Tax (IPI), and 

• Service Tax (ISS), 

which are state, federal, and municipal taxes, respectively. 

Federal level Tax/Contribution:

• IPI (Tax on Industrialized Products): A federal tax on industrialized products, levied on manufacturers and importers.
• PIS/COFINS (Social Contributions on Sales Revenue): Federal taxes on gross revenue, with rates varying depending on the type of product or service.

2) IBS – Imposto sobre Bens e Serviço - Goods and Services Tax:

Municipal level tax:

• ISS (Tax on Services): A municipal tax on services provided within the municipality.
  
  State-level tax:
• ICMS (Tax on Circulation of Goods and Services): Levied by states on the circulation of goods, interstate and intermunicipal transportation, and communication services.

The full CBS rate will take effect starting in 2027, while the IBS rate will be established in 2029. According to the approved tax reform, the reference rates for the new taxes will be determined by a Senate resolution.

Several sources within the current government estimate that the general VAT (IVA) rate should be around 28%. However, the proposed regulation includes a cap of 26.5% for the average rate.

As a result, the government will need to submit a supplementary bill to review tax benefits if the actual rate exceeds expectations

What will the new VAT system be like?

The new tax reform will introduce a Dual VAT system beginning in 2026. This model aims to streamline the process of tax collection and eliminate the cumulative effects of taxation on consumption. It is based on the traditional concept of Value Added Tax (VAT), which applies the tax only to the value added at each stage of the production chain.

Dual VAT will be made up of the Contribution on Goods and Services (CBS), which will replace PIS, Cofins, and IPI with federal collection, and the Goods and Services Tax (IBS), which will replace ICMS and ISS with state and municipal collection.

The main feature of IVA DUAL or Dual VAT is that it taxes the added value at each stage of the production chain. This means that the tax will not be levied on the total value of the product or service, but only on the added value that occurs at each stage of production, marketing, and service.

It will be levied on a non-cumulative basis, ensuring that companies can offset taxes previously paid in the production chain. This prevents the tax from being levied in cascades, reducing distortions and improving the transparency of the tax burden.

Another important point is that the collection will be shared between the Union, States, and Municipalities. The CBS will be collected by the Union, while the IBS will go to the states and municipalities. The regulations still have to define the exact percentages of the tax rates and how the funds collected will be distributed.

Legal Framework for Corporate Accounting 

Accounting practices in Brazil are governed by the Brazilian Corporate Law (Law No. 6.404/1976), as amended, and regulated by the Brazilian Federal Accounting Council (CFC). Companies are also required to comply with the Brazilian generally accepted accounting principles (BR GAAP), which have been converging with International Financial Reporting Standards (IFRS) since 2010. 

All legal entities must maintain formal bookkeeping records in Portuguese, using the Brazilian currency (Real – BRL), and following the accrual basis of accounting. The annual financial statements must include a balance sheet, income statement, statement of cash flows, and explanatory notes. For corporations (S.A.) and large limited liability companies, an external audit by an independent auditor registered with the Brazilian Securities Commission (CVM) is mandatory. 

In practice, most companies rely on accounting software integrated with Brazil’s digital reporting systems to manage compliance and reporting efficiently. 

SPED: Brazil's Digital Bookkeeping System 

One of the most defining features of Brazil’s accounting and tax landscape is its digital reporting infrastructure, known as the Public Digital Bookkeeping System (SPED). It was developed by the Brazilian Federal Revenue (Receita Federal) to increase transparency and reduce tax evasion. 

• SPED includes several modules, two of which are particularly relevant for corporate taxpayers: 

• ECD (Digital Accounting Bookkeeping): This is the electronic version of traditional accounting books. Companies must file it annually, including the journal, general ledger, trial balance, and financial statements. 

• ECF (Digital Tax Bookkeeping): This module replaces the traditional Corporate Income Tax Return. It includes detailed information about the company’s financial performance, tax base calculations, and adjustments required for tax purposes. 

Timely and accurate submission through SPED is mandatory. Late filings or inconsistencies may lead to significant penalties. As such, companies operating in Brazil often partner with local tax advisors and digital compliance providers to manage this process. 

Recent Changes in Transfer Pricing Rules 

Historically, Brazil maintained a unique transfer pricing framework that diverged from international standards. However, in 2023, the country took a decisive step toward global harmonization by adopting the OECD Transfer Pricing Guidelines. The new rules became mandatory for most taxpayers starting January 1, 2024. 

The reform introduced the Arm’s Length Principle, replacing the prior fixed-margin system. Under the updated framework, multinational enterprises (MNEs) must assess whether their cross-border intercompany transactions reflect market conditions, like what independent entities would agree upon in comparable circumstances. 

The reform also brought new documentation requirements. Businesses must now provide a Local File and Master File, aligning with the OECD's three-tiered approach. These changes are expected to reduce the risk of double taxation and improve Brazil’s attractiveness to foreign investors. 

Companies operating in Brazil should review their transfer pricing policies and ensure alignment with the new standards, especially for high-risk transactions such as the licensing of intangibles, financial intercompany loans, and cost-sharing agreements. 

Implementation of the Global Minimum Tax 

In accordance with OECD’s Pillar Two initiative, Brazil has implemented a global minimum tax of 15%, applicable from January 1, 2025. This new measure affects multinational groups with consolidated revenues exceeding EUR 750 million. 

The objective of this rule is to prevent profit shifting to low-tax jurisdictions. Brazilian subsidiaries of multinational groups must now calculate a top-up tax if their effective tax rate falls below the 15% threshold. 

Although Brazil’s effective corporate tax rate generally exceeds the global minimum, this rule may still affect companies that benefit from sector-specific incentives or regional tax holidays. It also creates new reporting obligations and requires coordination with headquarters and foreign affiliates to ensure consolidated compliance. 

Permanent Establishment and Withholding Taxes 

Non-resident companies doing business in Brazil may trigger a permanent establishment (PE) if they maintain a fixed place of business or conduct business through a dependent agent. Once a PE is deemed to exist, the entity is subject to local corporate income tax and compliance obligations. 

Brazil also imposes withholding taxes on cross-border payments. Dividends are currently exempt from withholding tax, but interest, royalties, and technical service fees are subject to rates ranging from 15% to 25%, depending on the nature of the payment and the recipient’s jurisdiction. It's important to note that Brazil does not follow the OECD Model Tax Convention and is not part of the OECD Multilateral Instrument (MLI), so each treaty must be reviewed individually. 

A proposed tax reform bill under review may introduce changes to dividend taxation and alter the withholding regime. Businesses should monitor these developments closely. 

Companies looking to enter or expand in the Brazilian market should consider partnering with experienced local tax and accounting professionals. Staying informed about legislative updates and utilizing available digital tools are essential steps for maintaining compliance and optimizing tax positions in this dynamic environment.