Brazil opens consultation on Amendments to its QDMTT for the SBTI Safe Harbour

On April 17, 2026 Brazil opened a public consultation to amend RFB Normative Instruction No. 2,228/2024, which implements Brazil’s domestic minimum top-up tax through the Additional CSLL (QDMTT). Brazil is seeking to align its domestic rules with the OECD January 2026 Administrative Guidance, specifically the new Substance-based Tax Incentive Safe Harbour.

Overview: Brazil’s Additional CSLL intended to operate as a QDMTT

Brazil’s Pillar Two legislation is structured as an additional charge to the Contribuição Social sobre o Lucro Líquido rather than as a standalone corporate income tax. Law No. 15,079 of 27 December 2024 instituted the Additional CSLL in the process of adapting Brazilian law to the GloBE Rules, and Article 2 states that the purpose is to establish a 15% effective minimum taxation in line with the GloBE Rules developed by the OECD/G20 Inclusive Framework.

The statute gives the RFB broad implementing authority. Article 3 authorises the RFB to regulate currency conversions, definitions, GloBE income and covered-tax adjustments, elections, allocation rules, the substance-based income exclusion, restructurings, safe harbours and other technical matters. Crucially, Article 3(1) requires the regulation to be prepared and periodically updated so that it remains consistent with OECD Inclusive Framework reference documents and so that the Additional CSLL meets the requirements to qualify as a QDMTT.

The RFB states that the regulation must be updated periodically to reflect reference documents published after 31 December 2023 so that the Additional CSLL can continue to be treated as a QDMTT. The consultation identifies the January 2026 OECD Administrative Guidance, the Side-by-Side Package, as the relevant new reference document, but only in relation to the Substance-based Tax Incentive Safe Harbour.

What the consultation covers

The consultation proposes a new Section IV to be inserted into Chapter VII of IN RFB No. 2,228/2024, covering Articles 143-A to 143-L. The RFB’s notice lists the proposed provisions as dealing with general rules, the definition of a Qualified Tax Incentive or Incentivo Fiscal Qualificado (IFQ), expenditure-based incentives, production-based incentives, incurred expenditures and production quantities, qualified refundable tax credits, the amount of IFQ used in the fiscal year and the substance cap.

The proposed amendments are intended to apply from 1 January 2026. Submissions are due between 17 April and 3 May 2026. The Ministry of Finance notice is also explicit that other elements of the January 2026 Side-by-Side Package may be addressed in future consultations (eg the Simplified ETR Safe Harbour). 

The OECD’s SBTI Safe Harbour 

The OECD January 2026 Side-by-Side Package includes several measures: a Simplified ETR Safe Harbour, a one-year extension of the Transitional CbCR Safe Harbour, the Substance-based Tax Incentive Safe Harbour, and the broader Side-by-Side System. The OECD describes the SBTI Safe Harbour as allowing certain Qualified Tax Incentives (expenditure-based and certain production-based tax incentives) to be treated as an addition to covered taxes, subject to a substance-based cap.

The OECD guidance frames the safe harbour as a way to preserve tax incentives that are closely connected to substantive activities in a jurisdiction. The SBTI Safe Harbour allows an MNE group to treat certain QTIs as an addition to Adjusted Covered Taxes of constituent entities in the jurisdiction, with the adjustment limited by a Substance Cap calculated by reference to payroll and tangible assets in the jurisdiction.

Without such a rule, non-refundable credits, super deductions, exemptions or reduced rates can reduce covered taxes and lower the jurisdictional ETR, thereby generating top-up tax that effectively claws back part of the domestic incentive. With the SBTI/QTI mechanism, the GloBE computation can neutralise, up to the substance cap, the top-up tax that would otherwise arise solely because of qualifying substance-linked incentives.

The proposed Brazilian rule

Proposed Article 143-A provides the operative rule. The SBTI Safe Harbour would allow an MNE group to treat a Qualified Tax Incentive (IFQ), or part of it, as an increase to the Adjusted Covered Taxes of the constituent entities located in the jurisdiction. The amount added is the lesser of the IFQ used in the fiscal year and the jurisdiction’s substance cap. The election is a one-year election made by the filing constituent entity and is available for fiscal years beginning on or after 1 January 2026.

This tracks the OECD rules closely. The practical effect is that for Pillar Two purposes, a qualifying incentive is treated as a covered-tax increase, but only up to the level of substance in Brazil. This is therefore a targeted safe harbour, not a general exclusion for all Brazilian tax incentives.

Which Brazilian incentives can qualify?

Proposed Article 143-B defines IFQs as expenditure-based incentives and production-based incentives that meet the requirements of the new section. An IFQ must reduce a current or future obligation relating to a Covered Tax in the jurisdiction. The proposal excludes incentives that reduce non-covered taxes, incentives relating only to expenditure incurred to generate income excluded from GloBE income, subsidies or grants, incentives whose eligibility is restricted exclusively to in-scope MNE groups, and incentives whose critical aspects depend on central-government discretion.

That definition is closely aligned with the OECD’s QTI definition.

The exclusion for incentives available only to in-scope MNE groups is especially significant. It reflects the anti-arbitrage concern that a jurisdiction should not design a Pillar Two-specific incentive available only to groups within the GloBE scope and then treat that incentive as a qualifying substance-based incentive. 

Expenditure-based incentives: credits, super deductions and exemptions

Proposed Article 143-C defines an expenditure-based tax incentive as one where the amount of tax relief is based on a portion of the taxpayer’s expenditures and reduces the final economic cost of inputs by a fixed and determinable amount. The proposal states that such incentives are directed at expenditures connected with activities expected to generate positive spillovers, such as research and development, productivity improvements or environmental-impact reductions, and must have a direct and clear link with the incentivised investment.

Proposed Article 143-D then confirms that an expenditure-based incentive may take the form of a credit against a covered tax, a super deduction or enhanced deduction, or an exemption/reduced rate applied to a specified amount of income or profits. Pure timing benefits from capital allowances are excluded, but the excess portion of a super deduction or enhanced allowance that creates a permanent difference may qualify.

The OECD guidance is consistent: it says expenditure-based incentives may be provided as credits, enhanced allowances, super deductions or, where calculated directly by reference to expenditure, income exemptions. It also distinguishes ordinary timing differences, such as accelerated depreciation, from permanent benefits that may qualify as QTIs.

A key limiting rule appears in proposed Article 143-E. An expenditure-based incentive will not qualify if the value of the tax benefit exceeds the amount of the underlying expenditure. For that test, the incentive must be considered together with all other incentives granted with respect to the same expenditure item. The proposal also sets out how to value the benefit: the credit amount for a credit, the additional deduction multiplied by the applicable tax rate for a super deduction, and the exempt or reduced-rate income multiplied by the relevant tax-rate benefit for exemptions or reduced rates.

Production-based incentives: limited to quantities of tangible production in the jurisdiction