🌎 Brazil has officially implemented (some of) the GloBE rules of OECD – OCDE Pillar Two. The full text in Portuguese is available here (https://bit.ly/47UDWhU) and as a PDF attached to this post.
This is a Provisional Measure that has to be converted into law in up to 60 days (or 120 days if the deadline is extended), but, much like the recently approved OECD Transfer Pricing Guidelines (originally a Provisional Measure that became Law 14,596/2023), it is unlikely that Congress will amend or oppose its more substantive points.
Here are a few noteworthy observations about the text:
âž¡ Brazil has decided to adopt Pillar Two by implementing a Qualified Domestic Minimum Top-Up Tax (QDMTT). This is a more conservative/defensive approach than the option made by some other countries, which was to implement the full package of GloBE rules – the Income Inclusion Rule (IIR), the very controversial Undertaxed Profits Rule (UTPR) and the QDMTT.
âž¡ Art. 4th of the Provisional Measure follows the Model Rules in terms of their scope (MNE groups with annual gross revenues of EUR 750 million or more in two of the preceding four fiscal years). One well-known outlier in terms of scope is Colombia, which has applied its Domestic Minimum Tax to local companies as well as members of MNE groups (regardless of whether they meet the OECD revenue threshold).
âž¡ The QDMTT is introduced in the Brazilian legal system as a Social Contribution on Net Profits (CSLL) surtax. It will be interesting to see whether the “placement” of the QDMTT as a surtax to a social contribution will trigger any specific concerns/consequences in terms of its application.
If you wish to read the Portuguese text of the Normative Instruction that the Federal Revenue of Brazil published to accompany the Provisional Measure, it is available here: https://bit.ly/4dw2z5F
