Brazil's tax authority seeks public input on amendments to its minimum top-up tax regulations, introducing new safe harbour provisions for substance-based incentives in line with OECD Pillar Two guidance. The consultation closes on 3 May 2026. 

RF Report

Brazil’s Federal Revenue Service has initiated a public consultation on significant amendments to Normative Instruction RFB No. 2.228, issued on 3 October 2024.

The proposed changes aim to align the country’s qualified domestic minimum top-up tax (QDMTT) with the latest OECD guidance on Pillar Two, specifically incorporating the Substance-based Tax Incentive (SBTI) Safe Harbour from the Side-by-Side Package released in January 2026.

The Additional Social Contribution on Net Profit (CSLL), originally introduced through Provisional Measure No. 1.262 on 3 October 2024 and subsequently formalised in Law No. 15.079 on 27 December 2024, serves as Brazil’s primary mechanism for implementing the 15% global minimum tax requirements under the OECD’s Pillar 2 framework.

The proposed amendments will add a comprehensive new Section IV to Chapter VII of the existing regulation, expanding Brazil’s alignment with international tax standards.

Defining qualified tax incentives

The draft rules establish two distinct categories of incentives that qualify for favourable treatment under the safe harbour provisions. These qualified tax incentives can be treated as additions to covered taxes rather than as reductions to the effective tax rate, providing significant benefits for multinational enterprises operating in Brazil.

  • Expenditure-based incentives encompass benefits directly linked to specific spending activities expected to generate measurable positive outcomes. These include investments in research and development (R&D) programmes, initiatives aimed at productivity improvements across operations, and expenditures focused on environmental impact reduction measures. The key requirement is that these incentives must be tied to actual expenditures rather than simply revenue or profit calculations.
  • Production-based incentives represent a separate category that includes credits calculated based on the physical quantity of units produced rather than their monetary value. Examples include credits tied to electricity generation volumes or mineral extraction quantities, where the benefit is determined by output levels rather than market prices or revenues.

Calculating the substance limit

The amendments introduce detailed provisions for calculating the substance limit, which serves as a cap on how much of the incentive value can be used to increase covered taxes under the QDMTT framework. This calculation method ensures that tax incentives remain within reasonable boundaries aligned with actual economic substance.

The general substance limit is established at 5.5% of the higher amount between two key metrics: total eligible payroll costs incurred in Brazil or the combined depreciation and exhaustion of eligible tangible assets. This approach ensures that the limit reflects genuine business activity and physical presence in the country.

Alternatively, multinational groups can opt for a simplified calculation method using a 1% limit based on the carrying value of eligible tangible assets located in Brazil. This alternative excludes land and other non-depreciable assets from the calculation base, providing a streamlined option for companies with significant fixed asset investments.

Integration with existing framework

The proposed SBTI Safe Harbour represents a distinct approach from the existing Substance-based Income Exclusion (SBIE) already contained in Chapter IV of the current regulation. The SBIE currently allows for a reduction of GloBE profit based on 5% of eligible payroll costs and 5% of the carrying value of eligible tangible assets, serving a different purpose in the overall tax calculation framework.

The current version of Normative Instruction RFB No. 2.228 expressly incorporates OECD reference documents, including the Model GloBE Rules, Commentary, and Administrative Guidance approved by the Inclusive Framework through July 2025. The proposed amendments will advance this alignment to include the January 2026 OECD guidance, ensuring Brazil remains current with evolving international standards.

Currently, Chapter VII of the regulation contains only three sections covering General Provisions, Transitional GloBE Safe Harbour, and Permanent GloBE Safe Harbour. The addition of Section IV represents a substantial expansion designed to accommodate the new SBTI Safe Harbour provisions alongside existing simplification mechanisms.

The new provisions will supplement rather than replace existing mechanisms such as Qualified Refundable Tax Credits, which are currently treated as income for GloBE purposes rather than as reductions to covered taxes.

The amendments are designed to take effect retroactively from 1 January 2026, providing immediate applicability once finalised. This effective date aligns with the broader implementation timeline for Brazil’s QDMTT regime and ensures coordination with international Pillar Two requirements.

Interested stakeholders, including multinational enterprises, tax professionals, and industry associations, are invited to submit written comments and technical feedback on the proposed amendments until 3 May 2026.