Pillar 2 Dashboard: Brazil

On October 3, 2025 Normative Instruction RFB No. 2282, of October 2, 2025 was published in the Official Gazette. This includes amendments to Brazil’s QDMTT Law for the OECD June 2024 and January 2025 OECD Administrative Guidance.

On August 29, 2025, Brazil issued proposed amendments to its QDMTT Law for consultation to take account of the June 2024 and January 2025 OECD Administrative Guidance and other sundry amendments.

On December 30, 2024, Brazil’s President enacted Law No. 15,079, of December 27, 2024, that repeats (with minor amendments) Provisional Measure No. 1,262, of October 3, 2024, to introduce a Domestic Minimum Tax from January 1, 2025.

On December 31, 2024, Normative Instruction No. 2245, of December 30, 2024 was issued which implements the detailed regulations for the provisions of the domestic minimum tax as provided in Normative Instruction No. 2,228, of October 3, 2024, with a number of amendments.

On October 3, 2024, Brazil issued Provisional Measure No. 1,262, of October 3, 2024, to introduce a Domestic Minimum Tax from January 1, 2025. It is designed to meet the requirements of the OECD Model Rules and Administrative Guidance and qualify as a Qualified Domestic Minimum Top-Up Tax for GloBE purposes. If the Provisional Measure is not ratified by Congress, it will become ineffective. On December 17, 2024, the Chamber of Deputies approved Bill 3817/24 that repeats the provisional measure and implements the DMT. On December 18, 2024, it was approved by the Senate.

Normative Instruction No. 2,228, of October 3, 2024 was also issued to regulate the application of the QDMTT.

GLOBE APPLICATION

General

Article 3 of the Law states that the DMT has been drafted and will be periodically updated so that it is in line with the reference documents approved by the OECD Inclusive Framework, and its provisions shall be established so that it is a Qualified Domestic Minimum Top-up Tax (QDMTT) for GloBE purposes.

Article 1 of the amended Normative Instruction provides that it includes the Model GloBE Rules, the Commentary to the GloBE Rules, the Agreed Administrative Guidance and the other rules, guidelines and procedures (‘Reference Documents’), approved by the OECD Inclusive Framework until December 2023 (extended to July 2025 in the 2025 updated Normative Instruction). 

As such, the Normative Instruction includes most aspects of the first three sets of OECD Administrative Guidance, and most of the provisions of the Model GloBE rules and Commentary are included, subject to the mandatory and optional deviations permitted for a QDMTT.

Article 1(4) of the amended Normative Instruction confirms that the aim of the regulation is for the DMT to meet the requirements to qualify as a QDMTT. The Reference Documents are also expressly stated to be subsidiary sources of interpretation for Brazilian tax purposes providing they are approved by the Special Secretariat of the Federal Revenue of Brazil.

The Normative Instruction includes the Transitional CbCR Safe Harbour (updated for the December 2023 Administrative Guidance) and the Simplified Calculations Safe Harbour for Non-Material Constituent Entities.

Administrative Guidance

The Normative Instruction reflects most of the key elements of the February, July and December 2023 OECD Administrative Guidance. As such, the following are included:

-Rebasing monetary thresholds in the GloBE Rules (Article 1.1 and AG2)

-Deemed consolidation test (Article 1.2)

-Sovereign wealth funds and the definition of Ultimate Parent Entity (Article 1.4)

-Clarifying the definition of ‘Excluded Entity’ (Article 1.5)

-Meaning of “ancillary” for Non-Profit Organisations (Article 1.6)

-Forex hedge election (Article 2.2)

-Excluded Dividends – Asymmetric treatment of dividends and distributions (Article 2.3)

-Debt release election (Article 2.4)

-Accrued Pension Expenses (Article 2.5)

-Excess negative tax carry-forward guidance (Article 2.7)

-Substitute Loss carry-forwards (Article 2.8)

-Equity Gain or loss inclusion election (Article 2.9)

-The extension of the taxable distribution method election to insurance investment entities (Article 3.1)

-Restricted Tier One Capital (Article 3.3)

-Liabilities related to Excluded Dividends and Excluded Equity Gain or Loss from securities held on behalf of policyholders (Article 3.4)

-Portfolio shareholding election (Article 3.5)

-Application of Tax transparency election to Mutual insurance companies (Article 3.6)

-Transitional rules (Article 4)

-Additional rules (such as the deemed 50% requirement where employees perform work outside the employer’s jurisdiction for the SBIE) (Second Set of OECD Administrative Guidance).

The Transitional CbCR Safe Harbour aspects of the Third Set of OECD Guidance are also included (see below).

On October 3, 2025 Normative Instruction RFB No. 2282, of October 2, 2025 was published in the Official Gazette. This includes amendments to Brazil’s DMT Law for the OECD June 2024 OECD Administrative Guidance and other sundry amendments.

The general text that accompanied the original draft of the amended Normative Instruction provided that no amendments were needed for the January 2025 OECD Administrative Guidance.

The amendments in the law will generally apply for tax years beginning after January, 2025. However, a number of the amendments are to apply from January 1, 2026 with an option to apply them from January 1, 2025.

Amendments from the June 2024 OECD Administrative Guidance include:

-Aggregate DTL Category basis (Article 1.2.1);

-Exclusion of certain types of GL accounts and separate tracking (Article 1.2.1);

-Exclusion of GL accounts that generate standalone DTAs (Article 1.2.1);

-Exclusion of swinging accounts and separate tracking (Article 1.2.1);

-FIFO/LIFO Basis (Article 1.2.2);

-Aggregation of Short-term DTLs (Article 1.2.3);

-Reversal of DTLs that accrued before the Transition Year (Article 1.2.2);

-5 year unclaimed accrual election (Article 1.2.2);

-Recalculated deferred tax where GloBE carrying value differs from accounting carrying value (Article 2.1.2);

-GloBE and accounting carrying values and the Transition Rules (Article 2.1.2);

-Exclusion of GloBE carrying value from SBIE (Article 2.1.2);

-General rules for allocating cross-border, current taxes under a cross-crediting corporate tax system: 4 Steps (Article 3.1.3);

-Specific rules for foreign PEs/CFCs, Hybrids/reverse hybrids with domestic source income (Article 3.1.3);

-Cross-crediting between Permanent Establishments and distributions from foreign subsidiaries (Article 3.1.3);

-Extension of the Substitute Loss Carry-forward DTA to PEs, hybrids and reverse hybrids (Article 4.1);

-Allocation of deferred tax expenses and benefits from a Parent Entity to a CFC, PE Hybrid or Reverse Hybrid: 5 step process (Article 4.2);

-Determining GloBE status when a Flow-through Entity is held directly by another Flow-through Entity (Article 5.2.2);

-Non-group owners: Partially owned Flow-through Entities (Article 5.3.2);

-Non-group owners: Indirect minority ownership (Article 5.3.5);

-Taxes allocated to a flow-through entity (Article 5.4.2);

-Hybrid entities – Taxes pushed down include indirect owners (Article 5.5.2);

-Hybrid entities – Entities located in jurisdictions without a Corporate Income Tax system (Article 5.5.4);

-Extension of taxes pushed down to include Reverse Hybrids (Article 5.6.2);

-Option to not impose top-up tax liabilities on SPVs used in securitization transactions (Article 6.1.4);

-New definition: Securitization Entity (Article 6.1.4); and

-New definition: Securitization Arrangement (Article 6.1.4).

Safe Harbour and Penalty Relief Guidance

The Normative Instruction provides for the application of the:

-Transitional CbCR Safe Harbour;

-Simplified calculation for Non-Material Constituent Entities Safe Harbour.

The Safe Harbours tie in with the OECD guidance in its published Safe Harbour Guidance and the July 2023 and December 2023 Administrative Guidance.

Therefore, the various amendments to the Transitional CbCR Safe Harbour in the December 2023 OECD Administrative Guidance are reflected. This includes:

-Transitional CbCR – Purchase Accounting Adjustments (consistent reporting condition, goodwill impairment adjustment) (Article 1)

-Transitional CbCR – JVs (Article 2.2.1)

-Transitional CbCR – Same Financial Statements/Local Financial Statements for Statutory Reporting (Article 2.3.1)

-Transitional CbCR – Using different accounting standards (Article 2.3.2)

-Transitional CbCR – Adjustments to Qualified Financial Statements/Dividend Mismatches (Article 2.3.3)

-Transitional CbCR – MNEs not required to file CbC Reports (Article 2.3.4)

-Transitional CbCR – Qualified Financial Statements for PEs (Article 2.3.5)

-Transitional CbCR – Treatment of Taxes on income of PEs, CFCs, and Hybrid Entities (Article 2.3.6)

-Transitional CbCR – Treatment of hybrid arbitrage arrangements (Article 2.6)

ELECTIONS

Elections in the OECD Model Rules

Most of the elections included in the OECD Model Rules are provided in the Normative Instruction, including:

-Excluded Entity Election (Article 3(16) of the Normative Instruction)

-Stock-Based Compensation Election (Article 12 of the Normative Instruction)

-Election to use the Realization Method (Article 16 of the Normative Instruction)

-Election to Spread Capital Gains (Article 7 of the Normative Instruction)

-Unclaimed Accrual Election (Article 51(3) of the Normative Instruction)

-GloBE Loss Election (Article 54 of the Normative Instruction)

-Prior Year Adjustment Election (Article 59(3) of the Normative Instruction)

-De minimis Election (Article 83 of the Normative Instruction)

-Deemed disposal Election (Article 96 of the Normative Instruction)

-Substance-Based Income Exclusion Election (Article 74(1) of the Normative Instruction)

-Taxable distribution Election (Article 121 of the Normative Instruction)

-Tax transparency Election Article 119 of the Normative Instruction)

Elections in the Administrative Guidance

Other elections included in the OECD Administrative Guidance are included in the Normative Instruction. This includes the:

-Excess Negative Tax Carry-Forward Election;

-Debt Release Election;

-Equity Investment Inclusion Election;

-Foreign Exchange Hedge Election;

-Portfolio Shareholding Election.

DEVIATIONS FROM THE OECD MODEL RULES/EU GLOBAL MINIMUM TAX DIRECTIVE

Certain aspects of the OECD Administrative guidance are not included in the Law/Normative Instruction either because they aren’t relevant for a QDMTT or for Brazil’s tax system. This includes:

-Exclusion of Insurance Investment Entities from the definition of Intermediate Parent Entity and Partially-Owned Parent Entity

-Marketable Transferable Tax Credits

-Consolidation Election (mentioned in the Provisional Measure but not included in the Normative Instruction)

-Distribution Tax Regime Election.

DOMESTIC MINIMUM TAX

General

The Law and Normative Instruction apply a domestic minimum tax (intended to be a QDMTT) with effect from January 1, 2025. As the IIR/UTPR are not provided for, the legislation is specifically to apply a QDMTT.  

QDMTT Design Features

Key aspects of the Brazilian QDMTT include:

Accounting Standard

Article 10 of the Normative Instruction provides that the Net Accounting Profit or Loss is based on the net profit or loss determined for the Constituent Entity in its individual financial statements, in accordance with the applicable accounting standards. These are defined as those adopted by the Constituent Entity to comply with company law issued by the Brazilian authorities.

Currency

Article 11 of the Normative Instruction provides that where all the Constituent Entities in the jurisdiction use the Brazilian Real as their functional currency, the QDMTT requires the relevant computations in that local currency.

However, if not all Constituent Entities in the jurisdiction use the Brazilian Real as their functional currency, the Filing Constituent Entity may make a Five-Year Election to undertake the QDMTT computations for all Constituent Entities in the jurisdiction either:

– in the presentation currency of the Consolidated Financial Statements; or

– in Brazilian Reals.

Taxes Pushed Down

Tax paid or incurred by a Constituent Entity-owner under a CFC Tax Regime that is pushed down to a domestic Constituent Entity in the GloBE Rules must be excluded, as provided in the OECD Administrative Guidance. This is included in Article 47 of the Normative Instruction.

Article 47 also prevents the pushdown of tax to hybrids, PEs and for taxes on distributions (aside from Brazilian withholding tax on distributions).

Attribution of the QDMTT

Article 70 of the Normative Instruction provides that the QDMTT shall be attributed to each Constituent Entity in proportion to the result of the multiplication of its Surplus Profits by the positive difference between fifteen percent and its Effective Rate. If this is not possible, the QDMTT will be assigned to Constituent Entities in proportion to their net assets.

However Article 70(4) of the Normative Instruction provides for an election so that the QDMTT may be assigned to a single Constituent Entity.

Shareholdings

The Brazilian QDMTT expressly applies irrespective of the shareholdings in the group entities located in Brazil. This reflects the OECD Administrative Guidance that provides that Top-up Tax that is subject to the QDMTT is based on the whole amount of the jurisdictional Top-up Tax calculated, irrespective of the ownership interests held in the Constituent Entities located in the QDMTT jurisdiction by any Parent Entity of the MNE Group.

Transitional Year

Article 147 of the Normative Instruction provides for the transitional year refreshing rule.

A new transition year, arises in an accounting period in which the entities of an MNE/domestic fall within the scope of a qualified IIR or UTPR if this accounting period begins after the beginning of the transition year for QDMTT purposes.

In the new transition year the following attributes of the relevant Constituent Entities are refreshed:

-Any Excess Negative Tax Expense Carry-forward under Article 4.1.5 or Article 5.2.1 is eliminated at the beginning of the new Transition Year.

-The DTL recapture rule in Article 4.4.4 does not apply to any deferred tax liability that was taken into account in computing the ETR under the QDMTT and that was not recaptured prior to the new Transition Year.

-Any GloBE Loss Deferred Tax Asset that arose in a year preceding the new Transition Year must be eliminated. The Filing Constituent Entity may make a new GloBE Loss election in the new Transition Year.

-The deferred tax items previously determined are eliminated and Article 9.1.1 is applied at the beginning of the new Transition Year.

-Article 9.1.2 applies to transactions occurring after November 30, 2021 and before the beginning of the new Transition Year. However, if QDMTT was payable due to the application of Article 4.1.5 in respect of a deferred tax asset attributable to a tax loss, the deferred tax asset is not treated as arising from items excluded from the computation of GloBE Income or Loss under Chapter 3 of the OECD Model Rules.

Registration

Not provided in the Legislation.

Filing

Article 153 of the Normative Instruction provides that Constituent Entities must provide all the information necessary for the calculation of the QDMTT. However, MNE groups can elect for a single Reporting Constituent Entity. A separate regulation is to be issued for the detailed provisions.

Payment

Article 73 of the Normative Instruction provides that the QDMTT must be paid by the Constituent Entities by the last business day of the seventh month following the end of the Fiscal Year.

Penalties

Article 154 of the Normative Instruction provides for detailed penalty rules. In particular if the QDMTT Return is submitted late or is presented with inaccuracies or omissions, the Constituent Entities located in Brazil will be subject to the following fines:

– 2% , per calendar month, of the total revenue of the Fiscal Year to which the obligation refers, limited to 10% (ten percent) and R$ 10,000,000.00 (ten million reais), when the information is no longer presented or is submitted late; and

– 5% (five percent), not less than R$ 20,000.00 (twenty thousand reais), of the omitted, inaccurate or incorrect amount.

No returns issued yet.

See ‘Domestic Rules’