Brazil Tax Archives - Midia Drummond

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Brazil’s Tax Reform has entered a new phase of implementation. Following the enactment of Constitutional Amendment No. 132/2023 and the publication of Complementary Law No. 214/2025, companies are already preparing for a transition period that will fundamentally transform how consumption taxes are assessed, reported, and collected. Although many of the changes will be implemented gradually […]

/ By Marcos Ferreira

Although many of the changes will be implemented gradually through 2033, several strategic decisions need to be made now. For Brazilian companies expanding internationally and foreign groups operating in Brazil, the Tax Reform represents much more than a legislative change: it requires a review of processes, corporate structure, technology, compliance, and tax planning.

In this article, we explain the key updates introduced by Brazil’s Tax Reform and how they impact companies operating globally.

What Changed Under Brazil’s Tax Reform?

The main objective of the reform is to simplify Brazil’s consumption tax system by replacing several existing taxes with a model similar to the Value-Added Tax (VAT) used in many countries.

The main changes include:

the gradual replacement of PIS, Cofins, ICMS, ISS, and part of IPI;
the creation of the Contribution on Goods and Services (CBS), a federal tax;
the creation of the Tax on Goods and Services (IBS), administered by states and municipalities;
the introduction of the Selective Tax (IS), levied on products considered harmful to health or the environment;
the adoption of destination-based taxation, reducing tax disputes between states.

For multinational companies, this new model brings Brazil closer to international tax practices, but it also requires adjustments to new tax assessment and compliance rules.

Implementation Timeline: What Happens Over the Next Few Years?

The reform will be implemented gradually.

Key milestones include:

2026: Testing Begins

Companies will enter a testing period for CBS and IBS, allowing them to make operational adjustments before effective collection begins.

2027: CBS Takes Effect

CBS begins replacing PIS and Cofins, requiring adjustments to systems, billing processes, and internal controls.

2029 to 2032: ICMS and ISS Transition

IBS will gradually replace state and municipal taxes, progressively reducing the application of ICMS and ISS.

2033: New System Fully Implemented

At the end of the transition period, CBS and IBS will form the core of Brazil’s new consumption tax system.

How Does the Tax Reform Impact International Companies?

Foreign companies often focus on corporate and labor considerations when entering Brazil. However, indirect taxation can represent one of the biggest operational challenges.

Under the reform, several changes deserve particular attention.

Greater Alignment With International Standards

Companies accustomed to operating in countries that use VAT-based systems will encounter a system that is more closely aligned with international practices.

This could facilitate:

integration of global processes;
accounting consolidation;
comparison of financial indicators;
international tax planning.

Supply Chain Review

Destination-based taxation changes the dynamics of many commercial operations.

Companies will need to review:

distribution centers;
interstate operations;
logistics agreements;
pricing strategies.

This analysis may generate significant operational efficiency gains.

Technology Adaptation

The reform will require updates to ERP systems, tax platforms, and tax document issuance systems.

Companies operating across multiple countries will need to ensure that their systems can simultaneously comply with Brazilian requirements and international reporting standards.

New Compliance Requirements

The transition will temporarily increase operational complexity.

For several years, companies will need to manage two tax regimes simultaneously.

This will require:

robust internal controls;
ongoing monitoring of legislation;
employee training;
integration among tax, accounting, finance, and legal teams.

The Impact on Brazilian Companies Going International

Brazil’s Tax Reform also affects Brazilian companies planning to expand their operations abroad.

International investors tend to assess factors such as:

tax predictability;
quality of corporate governance;
operational efficiency;
regulatory risks.

Companies that begin adapting to the new model now may demonstrate greater management maturity during due diligence processes, fundraising, and international expansion.

How Does the Tax Reform Affect M&A Transactions?

Mergers and acquisitions will also require additional analysis.

During due diligence processes, it will become increasingly important to assess:

tax contingencies related to the transition period;
adaptation of tax systems;
existing tax credits;
contractual impacts resulting from the change in tax regime.

Companies that anticipate this planning may reduce risks during future negotiations.

Technology Will Be a Competitive Advantage

The implementation of the reform reinforces the importance of digital transformation in tax management.

Tax automation tools, artificial intelligence, and data integration will play an increasingly strategic role in tax management.

Key benefits include:

reduced operational errors;
greater data traceability;
automated generation of ancillary tax obligations;
continuous monitoring of legislative changes;
improved corporate governance.

For multinational groups, integration between Brazilian systems and global platforms will be a decisive factor in ensuring compliance.

How Drummond Advisors Can Support Your Company

The Tax Reform requires a multidisciplinary approach that goes beyond interpreting legislation.

Domestic and international companies will need to align tax, corporate, accounting, technology, and regulatory considerations to navigate the transition safely.

Drummond Advisors provides integrated support to organizations operating in Brazil and the United States, assisting clients with areas such as:

assessing the impacts of the Tax Reform;
reviewing corporate and tax structures;
planning for international operations;
adapting accounting and tax processes;
tax compliance;
support for international expansion projects;
advisory services for M&A transactions and corporate reorganizations.

This integrated approach allows companies to transform a complex regulatory change into an opportunity to increase efficiency, reduce risks, and strengthen their global competitiveness.

Conclusion

Brazil’s Tax Reform represents one of the most significant transformations of the country’s business environment in recent decades. Although implementation will be gradual, its effects are already influencing strategic decisions related to international expansion, investments, corporate governance, and tax planning.

Companies that begin preparing now will be better positioned to take advantage of the new system, reduce compliance risks, and increase their competitiveness in an increasingly globalized market.

For organizations operating between Brazil and the United States, or planning to internationalize their businesses, understanding the changes brought by the Tax Reform is no longer simply a tax matter: it has become a strategic advantage.

Written by Marcos Ferreira*, Content Analyst at Drummond Advisors*

Sources

Tax Reform – Constitutional Amendment No. 132/2023: Planalto
Complementary Law No. 214/2025: Planalto
Brazilian Federal Revenue Service – Consumption Tax Reform: Receita Federal
IBS Management Committee – Information on Tax Reform implementation: IBS Management Committee
Ministry of Finance – Tax Reform: Ministry of Finance

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The Brazilian Federal Revenue Service consolidated the understanding that U.S. LLCs with non-U.S. resident ownership and treated as fiscally transparent entities may be characterized as a privileged tax regime. Although the Tax Ruling was issued in the context of individual income tax (IRPF), the matter also deserves attention from a transfer pricing perspective. With Law […]

/ By Drummond Advisors

Although the Tax Ruling was issued in the context of individual income tax (IRPF), the matter also deserves attention from a transfer pricing perspective.

With Law No. 14,596/2023, Brazil’s new transfer pricing framework maintained and reinforced the application of transfer pricing rules to transactions carried out with entities located in low-tax jurisdictions or benefiting from privileged tax regimes, even in the absence of a typical corporate relationship between the parties.

In practice, this may impact transactions such as:

– royalty payments to LLCs holding intangible assets;
– administrative or technology service agreements;
– intercompany loans and interest payments;
– import and export transactions;
– international distribution structures;
– cost-sharing agreements;
– compensation for the use of software, platforms, and intellectual property;
– corporate reorganizations involving foreign assets.

In many cases, companies that previously did not consider themselves subject to transfer pricing rules may now be required to demonstrate compliance with the arm’s length principle and prepare specific documentation.

In practice, structures involving LLCs may require a broader review of:

– the tax classification of the counterparty (for example, assessing whether the LLC is treated as a transparent or opaque entity abroad and whether it may be characterized as a privileged tax regime in Brazil);
– transfer pricing documentation (including master file, local file, and evidence supporting arm’s length compliance);
– functional analysis and economic substance (evaluating functions performed, risks assumed, assets used, and the entity’s actual economic presence abroad);
– policies related to interest, royalties, services, cost sharing, and intercompany charges (to validate whether compensation is aligned with market conditions);
– risks of IRPJ/CSLL adjustments (especially in cases where the Brazilian tax authorities understand that the amounts charged do not reflect arm’s length standards).

The classification of foreign entities is no longer just a discussion related to asset protection or succession planning. It now directly impacts the tax governance of groups operating across borders.

Given this scenario, Brazilian companies transacting with LLCs should review their structures, intercompany agreements, and transfer pricing policies before closing their respective tax obligations.

Drummond Advisors has a specialized Transfer Pricing & Cross-Border team available to assist companies in assessing the potential impacts arising from Brazil’s new transfer pricing rules, including the review of international structures involving LLCs, intercompany agreements, transfer pricing documentation, and compliance with the arm’s length principle under Brazilian legislation and OECD guidelines.

Written by Adriana Lemos, Transfer Pricing & Cross-Border Strategy Lead at Drummond Advisors

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Reporting in the Brazilian ECF (Tax Accounting Bookkeeping) is Approaching The Brazilian Tax Accounting Bookkeeping (ECF) for calendar year 2025 must be filed by July 31, 2026. This filing requires the disclosure of information under Brazil’s Worldwide Taxation Regime (TBU), which governs the taxation of results from foreign investees, both direct and indirect, in accordance […]

/ By Drummond Advisors

Reporting in the Brazilian ECF (Tax Accounting Bookkeeping) is Approaching

The Brazilian Tax Accounting Bookkeeping (ECF) for calendar year 2025 must be filed by July 31, 2026. This filing requires the disclosure of information under Brazil’s Worldwide Taxation Regime (TBU), which governs the taxation of results from foreign investees, both direct and indirect, in accordance with Law No. 12,973/2014.

What is the Worldwide Taxation Regime?

Concept: Brazil’s Worldwide Taxation Regime requires Brazilian legal entities with ownership interests in foreign companies to recognize those entities’ results in their IRPJ (Corporate Income Tax) and CSLL (Social Contribution on Net Profit) tax bases.
Documentation: In addition to including positive results in the annual tax calculation, detailed information about the foreign investee must be reported in Block X of the ECF. This includes balance sheets, income statements, active and passive income, accumulated losses, among others. The Brazilian entity must also maintain the financial statements of its subsidiary and proof of income taxes paid abroad.
Individualized Tracking: Results must be calculated individually and recorded in subaccounts, proportionally to the direct or indirect ownership interest. These results must exclude income derived from companies controlled directly or indirectly by the Brazilian parent, meaning intercompany equity results must be eliminated.

Losses: Losses incurred by the foreign investee may be offset against its own future positive results, provided they are properly tracked in the ECF (Block X and Part B).
Consolidation: Results may be consolidated at the level of the Brazilian parent company, regardless of the corporate structure, when the investees:
(i) are located in jurisdictions without tax treaties or information exchange agreements;
(ii) are located in (or controlled by entities located in) low-tax jurisdictions or subject to privileged tax regimes;
(iii) have active income representing less than 80% of total income.

• Foreign Tax Credit: Income taxes paid abroad may be offset in Brazil against the results of the respective investee. In consolidation scenarios, results may be aggregated for offset purposes.

Drummond Advisors Support

The Drummond Advisors team is prepared to support your company at every stage:

• Organizing required documentation
• Performing calculations in accordance with Law No. 12,973/2014
• Preparing or reviewing ECF records

Contact us via our available chat or by email at info@drummondadvisors.com to ensure your company’s tax compliance is properly structured.

Written by Hanna Lauar, Senior Associate at Drummond Advisors

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Transfer Pricing refers to the rules applicable to transactions carried out between companies within the same group located in different countries, such as the sale of goods, provision of services, licensing of intangibles, and financial transactions. The objective is to ensure that these transactions occur under conditions equivalent to those that would be practiced between […]

/ By Drummond Advisors

The objective is to ensure that these transactions occur under conditions equivalent to those that would be practiced between independent companies.

Legal Framework

In Brazil, the rules are established under Law No. 14,596/2023 and RFB Normative Instruction No. 2,161/2023, aligned with the OECD Transfer Pricing Guidelines (2022).

These regulations adopt the international standard based on the Arm’s Length Principle.

Main Methods

Brazilian legislation provides for methods aligned with OECD standards, including:

PIC – Comparable Uncontrolled Price (CUP)
PRL – Resale Price Minus Margin
CPL – Cost Plus
MLT – Transactional Net Margin Method (TNMM)
MDL – Profit Split Method (PSM)

The selection of the appropriate method depends on a functional analysis (functions, assets, and risks) and the availability of reliable comparables.

Mandatory Documentation

Companies must maintain documentation demonstrating:

• Description of controlled transactions
• Functional analysis
• Method applied
• Comparability study

The documentation structure follows the international standard:

• Master File (Global File)
• Local File
• Country-by-Country Report (CbCR) – mandatory for groups with consolidated revenue exceeding €750 million

The Master File and Local File may be waived when transactions are below R$15 million in a given year.

Transfer Pricing Penalties in Brazil

Non-compliance may result in penalties that vary depending on the violation, ranging from R$20,000 to R$5,000,000, in addition to potential tax adjustments imposed by the Brazilian Federal Revenue Service (Receita Federal).

Benefits of an Adequate Transfer Pricing Structure

Reduction of tax audit risks
Greater tax predictability
Optimization of income taxation across jurisdictions
Alignment with international standards
Technical support for tax audits and inspections

Transfer Pricing is a strategic matter that requires multidisciplinary technical analysis and alignment between tax, economic, and operational aspects. Proper structuring and documentation of intercompany transactions are essential to ensure companies’ tax security.

This material is for informational purposes only and does not replace individualized technical or legal analysis.

How Do We Support Your Company?

We offer specialized technical advisory services:

✔ Structuring and reviewing Transfer Pricing policies
Alignment of operations with the new Brazilian framework and OECD Guidelines.

✔ Functional Analysis (FAR)
Mapping functions, assets, and risks to properly characterize group entities.

✔ Method Selection and Application
We analyze which method best represents the Arm’s Length standard for your transaction.

✔ Comparability Studies (Benchmarking)
Identification of comparable companies and determination of appropriate margins.

✔ Intragroup Financial Transactions
Analysis of interest rates, guarantees, and risks of debt recharacterization as equity.

✔ Structuring Mandatory Documentation

• Master File (Global File)
• Local File
• Country-by-Country Report

In addition, we review ECF (Corporate Income Tax Return) records related to transfer pricing, and we have a specialized accounting team responsible for the proper completion of the ECF.

Contact us through the chat available on our website or by email at info@drummondadvisors.com

Written by Adriana Lemos, Lailma Sales, and Hanna Lauar.

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Changes Introduced by the New Legislation Supplementary Law (Lei Complementar – LC) No. 224/2025 was enacted on December 26, 2025, with the primary objective of restricting and establishing criteria for the granting of tax, financial, and credit incentives at the federal level. The law also amends provisions of the Fiscal Responsibility Law (LC 101/2000) and […]

/ By Drummond Advisors

Changes Introduced by the New Legislation

Supplementary Law (Lei Complementar – LC) No. 224/2025 was enacted on December 26, 2025, with the primary objective of restricting and establishing criteria for the granting of tax, financial, and credit incentives at the federal level. The law also amends provisions of the Fiscal Responsibility Law (LC 101/2000) and other related regulations. The main changes introduced include:

• Reduction of tax incentives: The law limits tax benefits and redefines the criteria for their granting, aiming to increase transparency and rationalize tax expenditures. The reduction will be implemented cumulatively, as follows:

Exemption and zero rate: application of a rate corresponding to 10% of the standard tax system rate;
Reduced rate: application of a rate corresponding to the sum of 90% of the reduced rate and 10% of the standard tax system rate;
Reduction of the tax base: application of 90% of the tax base reduction provided for in the specific legislation governing the benefit;
Financial or tax credits, including presumed or deemed credits: utilization limited to 90% of the original credit amount, with the unused portion canceled;
Reduction of tax due: application of 90% of the tax reduction provided for in the specific legislation governing the benefit;
Optional special or preferential tax regimes in which taxes are levied as a percentage of gross revenue: a 10% increase in the percentage applied to gross revenue.

• Presumed Profit Regime (Lucro Presumido): Companies with annual gross revenue between BRL 5 million and BRL 78 million are directly affected, with a 10% increase in the presumed profit percentages. The proportional limit will be observed for each assessment period within the year, allowing adjustments in subsequent periods.

• Interest on Equity (Juros sobre Capital Próprio – JCP): The withholding income tax rate on JCP was increased from 15% to 17.5%.

• Betting sector and payment institutions: The law establishes joint and several liability of third parties for the collection of taxes levied on fixed-odds betting activities.

Next Steps

LC 224/2025 may conflict with constitutional tax principles by treating the Presumed Profit Regime as a tax benefit rather than as a consolidated method of tax assessment. It is understood that the law may open the door to widespread litigation, as companies will face an increased tax burden due to this reclassification.

Affected companies will need to reassess their tax strategies, particularly whether it remains advantageous to opt for the Actual Profit Regime (Lucro Real) instead of the Presumed Profit Regime. Drummond Advisors is available to assist with assessing and planning for the tax impacts on your business.

Written by Hanna Lauar, Senior Associate at Drummond Advisors

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Law No. 15,270/2025, published on November 26, 2025, introduces significant changes to dividend taxation and to the global income regime applicable to individuals in Brazil. The new rules take effect in January 2026 and are expected to directly impact companies, investors, and structures involving Brazil–U.S. relations, making it necessary to reassess corporate structures, profit distribution […]

/ By Drummond Advisors

I – Withholding Tax on Dividends Paid Abroad

• Dividends paid to individuals or legal entities domiciled abroad will be subject to a 10% Withholding Income Tax (IRRF) on the amount effectively distributed (with no limitation).
• Profits generated up to December 31, 2025 remain exempt, provided that their distribution is approved by that date.
• Foreign beneficiaries may request a tax credit if the total taxation (including Corporate Income Tax – IRPJ, Social Contribution on Net Profit – CSLL, plus the 10% withholding) exceeds 34%.

Point of Attention: In structures involving the U.S., it is essential to assess compatibility with foreign tax credit rules, which do not always allow full utilization of the credit granted under Brazilian law.

II – Monthly and Annual High-Income Taxation in Brazil

• Monthly dividends exceeding R$ 50,000 paid by a legal entity to the same Brazilian resident individual will be subject to a 10% withholding tax, which may be offset in the Annual Income Tax Return. The offset will follow the specific progressivity of the Minimum Tax regime, whose maximum rate reaches 10% and does not apply the traditional IRPF progressive table (7.5% to 27.5%).
• A minimum tax rate of up to 10% will apply to annual income earned by Brazilian resident individuals exceeding R$ 600,000 (Minimum Taxation).

Point of Attention: The regime creates differentiated treatment between residents and nonresidents. While nonresidents face a definitive tax, residents may have a lower effective burden depending on their global income reported in the Annual Return.

III – Impacts on U.S. Tax Residents

• Dividends paid by Brazilian companies are treated as foreign source income in the U.S.
• As a rule, Brazilian withholding tax may be used as a foreign tax credit, depending on:
→ the nature of the income
→ IRS limitations
→ timing alignment of income recognition between Brazil and the U.S.

Point of Attention: In many situations, part of the Brazilian tax may become a nonrecoverable cost, especially when there is a timing mismatch between profit recognition and dividend distribution.

IV – Structures Most Affected

IV.a – Structures Using Check-the-Box (Disregarded / Partnership)

Brazilian entities treated as disregarded entities or partnerships for U.S. tax purposes may face a more complex environment under the new regime.

In these models:
• Profit is recognized and taxed at the level of the U.S.-domiciled partners (individuals or entities) at the time the Brazilian company generates it, allowing the use of credits related to IRPJ and CSLL paid in Brazil.
• The new 10% withholding tax applies only upon distribution, potentially creating a timing mismatch.

Points of Attention:

Risk of foreign tax credit disallowance when distribution occurs in a different tax year from the profit recognition year.
Increase in excess credits (nonusable credits), reducing global tax efficiency.

IV.b – U.S. Corporation Structures Using Section 245A (Dividend Received Deduction – DRD)

Under the previous regime, the combination of dividend exemption in Brazil and the application of the DRD in the United States — which also ensured full exemption at the U.S. C-Corp level — effectively resulted in zero tax cost for profit repatriation to the U.S.

Under Law No. 15,270/2025:
• The 10% Brazilian withholding tax becomes a definitive cost, as the DRD does not allow the C-Corp to use foreign tax credits.
• The main advantage of this structure, tax-free repatriation, no longer exists.

Points of Attention:

Brazilian subsidiaries of groups with U.S. holding companies become particularly exposed to the new 10% cost.
Need to reassess U.S. vehicles used to consolidate Brazilian operations.
Potential migration to hybrid structures, depending on the corporate profile and cash flow.
Review of dividend distribution policies, especially in groups with significant cash generation in Brazil.

V – Recommendation

Companies and investors should review their international tax planning structures, evaluating impacts on repatriation, intercompany flows, income recognition, and foreign tax credit utilization to ensure compliance and preserve tax efficiency in light of the changes introduced by Law No. 15,270/2025.

Written by Adriana Lemos, Team Leader of the Tax Planning and Research Team at Drummond Advisors

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As organizações sem fins lucrativos exercem papel fundamental na promoção do bem-estar social, na defesa de direitos e no desenvolvimento de projetos de interesse público no Brasil. Diferentemente das sociedades empresárias, essas entidades não têm como objetivo gerar lucro para distribuição entre seus membros, mas sim realizar atividades voltadas ao interesse coletivo. Todo o eventual […]

/ By Drummond Advisors

Entre as formas jurídicas mais comuns para estruturar tais entidades estão as Associações e as Fundações Privadas, ambas reguladas pelo Código Civil (Lei nº 10.406/2002), com características e regimes jurídicos distintos.

Associações Privadas

As associações são constituídas pela união de, no mínimo, duas pessoas — físicas ou jurídicas, nacionais ou estrangeiras — que se organizam em torno de um objetivo comum não econômico. Suas finalidades podem ser diversas, tais como culturais, educacionais, ambientais, filantrópicas, esportivas ou sociais.

A constituição de uma associação exige a elaboração e o registro de seu Estatuto Social, da Ata de Assembleia de Constituição e dos Termos de Posse dos diretores perante o Registro Civil de Pessoas Jurídicas competente. Somente após esse registro a associação adquire personalidade jurídica.

A estrutura de governança pode variar, mas normalmente compreende:

Associados, que participam das deliberações e definem os rumos da entidade;
Diretoria, responsável pela gestão e representação legal;
Conselho Fiscal, encarregado da fiscalização financeira e administrativa.

No campo tributário, as associações podem ter acesso a imunidades e isenções tributárias previstas em lei. A Constituição Federal assegura imunidade tributária às entidades que atuem em educação ou assistência social, desde que atendam aos requisitos legais.
Além disso, há certificações específicas — como a OSCIP (Organização da Sociedade Civil de Interesse Público) e o CEBAS (Certificação de Entidade Beneficente de Assistência Social) — que ampliam benefícios e possibilitam a celebração de parcerias com o poder público.

Fundações Privadas

As fundações, por sua vez, não resultam da união de pessoas, mas da destinação de um patrimônio a uma finalidade específica de interesse público, de forma permanente. Sua existência é ligada aos bens doados e não à pessoa do instituidor.

O instituidor, que pode ser pessoa física ou jurídica, deve destinar bens livres (como dinheiro, imóveis ou participações societárias) por meio de escritura pública ou testamento, especificando as finalidades da fundação e a forma de sua administração. A propriedade desses bens deve ser transferida permanentemente para a fundação.

Embora a lei não estabeleça um valor mínimo de patrimônio, este deve ser suficiente e compatível com as finalidades pretendidas pela entidade, sob pena de indeferimento pelo Ministério Público, que exerce fiscalização obrigatória sobre as fundações.

O regime jurídico das fundações é mais rígido que o das associações. O Ministério Público Estadual (ou o Federal, quando a fundação tiver atuação nacional) acompanha e fiscaliza tanto a constituição quanto qualquer alteração estatutária. Além disso, a fundação deve prestar contas anualmente ao Ministério Público.

Em caso de extinção, o patrimônio da fundação deve ser destinado a outra fundação com fins semelhantes, salvo disposição diversa prevista em seu Estatuto.

Assim como as associações, as fundações, também podem se beneficiar de imunidades e isenções tributárias, desde que atendam aos requisitos legais específicos.

Principais Diferenças entre Associações e Fundações

Embora ambas sejam organizações sem fins lucrativos, há diferenças relevantes entre esses dois tipos jurídicos:

• Origem: a associação nasce da união de pessoas; a fundação, da destinação de um patrimônio a um fim específico.

• Flexibilidade: a associação possui maior autonomia para definir e alterar suas regras; a fundação é mais rígida, com alterações sujeitas à fiscalização do Ministério Público.

• Finalidade: as associações podem atuar em qualquer atividade lícita e não lucrativa; já as fundações só podem ter as finalidades listadas no artigo 62 do Código Civil (educação, saúde, cultura, pesquisa, assistência social, entre outras).

• Fiscalização: nas associações, o controle é exercido pelos próprios associados; nas fundações, há fiscalização obrigatória do Ministério Público, para garantir que o patrimônio seja utilizado corretamente.

Em termos práticos, a associação é indicada quando o objetivo é reunir pessoas em torno de um propósito comum, com maior flexibilidade de governança e facilidade de adaptação.
A fundação, por outro lado, é recomendada quando se deseja vincular um patrimônio a uma causa pública de forma estável, duradoura e sujeita à fiscalização externa, garantindo maior segurança quanto à preservação de suas finalidades originais.

Por: Caroline Gomes, Advogada Associada da Drummond Advisors

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On October 1, 2025, Brazil’s Chamber of Deputies approved Bill No. 1,087/25, which significantly changes the taxation of individuals in Brazil and the taxation of dividend remittances to foreign recipients. High-Income Taxation: Dividends According to the Bill, starting in January 2026, the payment, crediting, use, or distribution of profits and dividends by a legal entity […]

/ By Drummond Advisors

High-Income Taxation: Dividends

According to the Bill, starting in January 2026, the payment, crediting, use, or distribution of profits and dividends by a legal entity to an individual resident in Brazil exceeding BRL 50,000 in the same month will be subject to withholding of the Minimum Individual Income Tax (IRPFM) at a rate of 10%.

The same rule applies to profits and dividends paid, credited, distributed, used, or remitted to nonresidents, which will also be subject to withholding income tax at a 10% rate.

High-Income Taxation: Annual

Additionally, the Bill establishes a progressive annual tax on income starting at BRL 600,000, with a maximum rate of 10% for income equal to or above BRL 1,200,000 per year. The progressive rate will be calculated using the following formula:

• Rate (%) = (Income ÷ 60,000) – 10

For example, if an individual resident in Brazil earns BRL 900,000 annually, the formula would be (900,000 ÷ 60,000) – 10, resulting in a 5% rate.

All income received during the calendar year will be considered, including those normally taxed on an exclusive or final basis, as well as exempt income or income subject to zero or reduced rates.

IRPFM Reduction Mechanism and Exception

The Bill establishes an adjustment mechanism: if the sum of the effective corporate tax rate and the IRPFM rate exceeds the nominal rates of the Corporate Income Tax (IRPJ) and the Social Contribution on Net Profit (CSLL), the Executive Branch must grant a reduction in the IRPFM, as regulated.

Additionally, IRPFM will not apply to dividends from profits generated up to the 2025 calendar year, provided that the distribution approval occurs by December 31, 2025.

Income Tax Exemption Range

The approved text also expands the Individual Income Tax (IRPF) exemption threshold to BRL 5,000 per month and reduces the taxation on monthly income up to BRL 7,350. Income above this amount will continue to be subject to the current progressive IRPF rates.

Next Steps

Bill No. 1,087/25 will now move to the Federal Senate for voting. If amended, it will return to the Chamber of Deputies. If approved without changes, it will proceed to presidential sanction.

Written by Hanna Lauar, Senior Associate at Drummond Advisors

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The revenue recognition is an accounting principle that asserts that revenue must be recognized as it is earned. The focus is on recognizing revenue at the time goods or services are delivered to customers, as opposed to when payment is made. The principle is regulated by similar standards in both the U.S. and internationally. For […]

/ By Paola Atzingen

For SaaS companies and service providers expanding between the United States and Brazil, revenue recognition can quickly become a complex topic. While U.S. GAAP (ASC 606) and Brazilian GAAP (CPC 47/IFRS 15) are built on the same five-step framework, the way the rules play out in practice isn’t always identical. Understanding these nuances is critical for finance leaders, controllers, and founders navigating cross-border operations.

One of the biggest areas of difference lies in implementation costs. Under U.S. GAAP, many cloud implementation expenses can be capitalized and amortized over the contract term. By contrast, Brazilian and IFRS rules usually require these costs to be expensed immediately—unless they result in a separable intangible asset.

Another key consideration is how to classify SaaS versus software licenses. SaaS arrangements are almost always recognized over time, reflecting the ongoing nature of service delivery. Licenses, however, can fall into two categories: point-in-time recognition (when control of the software transfers) or over-time recognition (when updates or access rights significantly affect utility). In Brazil, auditors will pay particular attention to documentation to ensure the classification supports both accounting and tax treatments.

Finally, Brazilian taxes add an extra layer of complexity. Levies such as PIS, COFINS, ISS, and withholdings (IRRF/CSRF) directly impact revenue presentation and cash flow. Companies must make sure their contracts clearly define whether values are gross or net, as this affects how revenue is reported and how cash is collected.

Despite these differences, the core principles remain the same. Both standards require identifying the contract and performance obligations, determining the transaction price, allocating it appropriately, and recognizing revenue either over time or at a point in time. Setup or activation fees are rarely recognized upfront and are generally deferred.

ASC 606 and CPC 47 usually result in similar revenue timing, but companies must carefully manage cost treatment, tax rules, and documentation to ensure compliance in both jurisdictions. For SaaS and service businesses aiming to scale internationally, having clear policies and audit-ready documentation is not just good practice—it’s a strategic necessity.

To know more about the differences in revenue recognition, and other aspects of business’ accounting, contact our specialists at Drummond Advisors! #LetsDoItTogether!

Written by Paola Von Atzingen, from the Drummond Advisors team

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In July 2025, the United States announced a 50% tariff on products imported from Brazil — an unprecedented decision that heightened trade tensions between the two countries. The new tariffs significantly increased import costs, prompting Brazilian companies with a strong presence in the U.S. market to explore supply chain adjustments in order to mitigate the […]

/ By Drummond Advisors

In this new context, it is crucial to understand the relationship between international trade, transfer pricing, and customs valuation, particularly in agreements between related entities involving cross-border transactions.

Impact of Tariffs on Transfer Pricing

Customs valuation and transfer pricing share a common objective: ensuring that prices applied between related companies are consistent with those that would be negotiated between independent entities.

However, tariffs directly affect the customs value of imported goods, influencing the profits reported by multinational companies. Taxpayers, tax authorities, and customs authorities may have conflicting interests when evaluating transfer pricing and customs values.

For instance, a company may seek to declare a lower import value to reduce customs duties, while simultaneously reporting a higher acquisition cost for tax purposes in order to reduce its income tax base. This misalignment increases the risk of challenges by both customs and tax authorities, highlighting the need for pricing policies that are consistent, technically substantiated, and compliant with applicable legislation.

Transfer pricing documentation, required for tax compliance purposes, often provides support for the values applied in related-party transactions.

What Actions Should Companies Consider in the Current Environment?

Given the rise in U.S. import tariffs, strategic adjustments in the supply chain may generate sustainable gains, though they involve complexity and additional costs. Companies may consider relocating production stages to countries with more favorable trade agreements or using structures that modify the customs origin of goods, always in compliance with applicable rules of origin.

Additionally, it is essential to reassess transfer pricing policies to absorb tariff impacts without compromising profit margins. Strategies such as reducing intercompany prices may preserve the distributor’s margin, but require close attention to customs valuation rules to avoid challenges by U.S. customs authorities.

Reviewing the chosen transfer pricing method can also ensure realistic comparability with companies not subject to the same tariffs, helping mitigate audit risks in an increasingly scrutinized environment.

Finally, it is worth noting that related-party transactions must be reported annually on U.S. income tax returns, and abusive practices may lead to severe penalties.

Written by Adriana Lemos, Team Leader – Tax Planning and Research Team