Brazil’s new rules establish a simplified GloBE mechanism allowing qualifying tax incentives to be added to Adjusted Covered Taxes, subject to substance-based limits and annual elections, for fiscal years beginning on or after 1 January 2026.
Brazil has published Normative Instruction RFB No. 2.342 of 15 September 2026 in the Official Gazette on 18 September 2026, amending Normative Instruction RFB No. 2.228 of 3 October 2024, which regulates the Additional Social Contribution on Net Profit (CSLL) under Brazil’s implementation of the OECD’s global minimum tax rules.
The Additional CSLL was introduced by Provisional Measure No. 1.262 of 3 October 2024 and subsequently established by Law No. 15.079 of 27 December 2024. It also establishes rigorous criteria for Qualified Tax Incentives (IFQ), distinguishing between benefits derived from actual expenditures and those based on tangible production quantities. The core innovation of this rule is the creation of the Simplified GloBE Rule for Substance-Based Tax Incentives (RSGIF).
Operation of the RSGIF
Brazil’s rules allow Multinational Enterprise groups to treat a Qualified Tax Incentive, in whole or in part, as an addition to the Adjusted Covered Taxes of constituent entities in the jurisdiction. The benefit is limited to the lesser of the Qualified Tax Incentive used during the fiscal year and the jurisdiction’s Substance Limit. The treatment is subject to an annual One-Year Election by the Filing Constituent Entity and applies for fiscal years beginning on or after 1 January 2026.
Definition and requirements for qualified tax incentives (IFQ)
Qualified Tax Incentives are categorised as expenditure-based or production-based incentives, both requiring strict statutory eligibility criteria:
- Expenditure-based incentives: Qualified Tax Incentives may take the form of tax credits, enhanced deductions, tax exemptions, or reduced tax rates, provided they are directly linked to the incentivised investment. The relief cannot exceed the actual expenditure incurred. Temporary timing benefits, such as accelerated depreciation, generally do not qualify unless enhanced deductions create permanent differences exceeding the original investment value.
- Production-based incentives: Qualified Tax Incentives must be based strictly on the physical quantity of tangible goods produced in the granting jurisdiction, such as manufacturing, power generation, or mining. Incentives based on the monetary value of production do not qualify.
Express exclusions (non-qualified)
Incentives are not IFQs if they reduce non-covered taxes, constitute pure government subsidies/grants, depend on the discretionary decision of the central government, or restrict eligibility exclusively to MNE Groups.
Calculating the substance limit
Brazil’s Substance Limit can be calculated using either a standard or alternative method. The standard method applies 5.5% to the greater of eligible payroll costs or depreciation, amortisation, and depletion of eligible tangible assets in Brazil. Alternatively, an MNE group can make a five-year election to apply 1% to the carrying value of eligible tangible assets, excluding land and other non-depreciable assets.
Other key provisions and transitional rules
- Qualified refundable tax credits: May be treated as IFQs upon an annual election, allowing them to be excluded from GloBE Income or added to Adjusted Covered Taxes.
- CSLL top-up tax transitional rates: For Fiscal Years starting on or before 31 December 2027, the CSLL top-up tax for the jurisdiction is considered zero if the jurisdiction meets the transitional effective tax rate thresholds of 16% for Fiscal Years starting in 2025 and 17% for Fiscal Years starting in 2026 or 2027.
Normative Instruction RFB No. 2.342 took effect on 18 September 2026, upon its publication.
