{"id":44812,"date":"2024-10-24T10:49:01","date_gmt":"2024-10-24T10:49:01","guid":{"rendered":"https:\/\/my.legal500.com\/developments\/?post_type=legal_developments&#038;p=44812"},"modified":"2024-10-24T10:49:49","modified_gmt":"2024-10-24T10:49:49","slug":"brazil-introduces-globe-minimum-tax-rules-medida-provisoria-no-1-262","status":"publish","type":"legal_developments","link":"https:\/\/my.legal500.com\/developments\/thought-leadership\/brazil-introduces-globe-minimum-tax-rules-medida-provisoria-no-1-262\/","title":{"rendered":"BRAZIL INTRODUCES GLOBE MINIMUM TAX RULES: MEDIDA PROVIS\u00d3RIA NO. 1.262"},"content":{"rendered":"<p><strong>On October 3, 2024, Brazil introduced Medida Provis\u00f3ria No. 1.262, aligning its tax regulations with the OECD\u2019s Global Anti-Base Erosion (GloBE) Rules.<\/strong><!--more--><span style=\"font-size: 1rem\">This is part of the <\/span><strong style=\"font-size: 1rem\">Inclusive Framework on Base Erosion and Profit Shifting (BEPS)<\/strong><span style=\"font-size: 1rem\">, which establishes a <\/span><strong style=\"font-size: 1rem\">minimum effective tax rate (ETR) of 15%<\/strong><span style=\"font-size: 1rem\"> for large multinational enterprises (MNEs).<\/span><\/p>\n<p>Key Features of the Legislation:<\/p>\n<ul>\n<li><strong>Adoption of a 15% Minimum ETR<\/strong>: The legislation introduces an additional <strong>Contribui\u00e7\u00e3o Social sobre o Lucro L\u00edquido (CSLL<\/strong>) to ensure that MNEs operating in Brazil meet the <strong>15% minimum effective tax rate on global profits<\/strong>, as required by the OECD\u2019s GloBE rules.<\/li>\n<li><strong>Scope<\/strong>: The rules apply to <strong>Multinational Groups<\/strong> with entities in Brazil and with <strong>annual<\/strong> <strong>consolidated revenues of \u20ac750 million or more<\/strong>, making these groups subject to the GloBE minimum tax regulations, similar to those implemented in other G20 and OECD countries.<\/li>\n<li><strong>Calculation of the Effective Tax Rate (ETR)<\/strong>: The <strong>ETR<\/strong> is calculated as the ratio of <strong>Adjusted Covered Taxes<\/strong> (taxes paid on income and profits) to GloBE Income (global book profits), expressed as a percentage. If the <strong>ETR<\/strong> in a particular jurisdiction is <strong>below 15%, the difference will be collected through an additional CSLL in Brazil<\/strong>. The formula for calculating the Additional CSLL in Brazil is: Additional CSLL = (15% &#8211; ETR) x GloBE Income (in Brazil).<\/li>\n<\/ul>\n<p>Key Takeaways:<\/p>\n<ul>\n<li><strong>Government Initiative<\/strong>: Unusually, the Brazilian government has issued both the executive order (Provisional Measure) and specific regulations simultaneously, indicating a strong commitment to getting this approved swiftly.<\/li>\n<li><strong>Legislative Process<\/strong>: The Provisional Measure must be approved by Congress. If passed in 2024, these rules will take effect on January 1, 2025.<\/li>\n<li><strong>OECD Guidelines<\/strong>: OECD commentary and guidelines have been included as interpretation framework for the new rules.<\/li>\n<li><strong>Impact on MNEs<\/strong>: Multinational corporations (MNCs) with business in Brazil will need to reassess their Effective Tax Rate (ETR), as calculated under the new provisions.<\/li>\n<li><strong>Impact on Tax Incentives and Planning Strategies<\/strong>: Several tax incentives and planning strategies widely utilized in Brazil may be significantly affected, including:\n<ul>\n<li>SUDENE\/SUDAM incentives,<\/li>\n<li>Goodwill amortization,<\/li>\n<li>Interest on Net Equity (INE),<\/li>\n<li>R&amp;D incentives,<\/li>\n<li>New government grant tax credit mechanisms.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Link to the Provisional Measure here: <a href=\"https:\/\/www.in.gov.br\/web\/dou\/-\/medida-provisoria-n-1.262-de-3-de-outubro-de-2024-58815820\">https:\/\/www.in.gov.br\/web\/dou\/-\/medida-provisoria-n-1.262-de-3-de-outubro-de-2024-58815820<\/a><\/p>\n<hr \/>\n<p>Author: <em>Bruno Marques Santo<\/em><\/p>\n","protected":false},"featured_media":0,"template":"","class_list":["post-44812","legal_developments","type-legal_developments","status-publish","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/legal_developments\/44812","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/legal_developments"}],"about":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/types\/legal_developments"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/media?parent=44812"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}