Taxes for foreign companies in Brazil and the 2026–2033 tax reform

Taxes on profit: IRPJ and CSLL

Companies pay corporate income tax (IRPJ) and the social contribution on net profit (CSLL). The two main regimes are:

• Real profit (lucro real): tax on the actual accounting profit, with adjustments required by law. Mandatory for some companies and often chosen by businesses with low margins or losses.
• Presumed profit (lucro presumido): tax on a percentage of gross revenue fixed by law. Available to companies with gross revenue of up to R$ 78 million in the previous year (Law 9,718/1998, art. 13).

Complementary Law 224/2025 increased by 10% the presumption percentages applied to the part of annual gross revenue that exceeds R$ 5 million (art. 4, §§ 4 and 5), with effects starting in 2026. The simplified Simples Nacional regime is not available to companies owned by another company or to branches of foreign companies (Complementary Law 123/2006, art. 3, § 4).

Dividends paid abroad

Since January 1, 2026, profits and dividends paid, credited or remitted abroad are subject to income tax withheld at 10% (Law 9,249/1995, art. 10, § 4, introduced by Law 15,270/2025). Profits for periods up to 2025 whose distribution was approved by December 31, 2025 are not subject to this withholding, provided they are paid as originally approved (§ 5, I). The law also provides a credit for the foreign beneficiary when the combined tax on the company's profit and on the dividend exceeds the nominal IRPJ and CSLL rates (art. 10-A).

Transfer pricing

Transactions with related parties abroad follow the arm's length principle adopted by Law 14,596/2023, in line with OECD standards, for IRPJ and CSLL purposes. Intercompany agreements, cost sharing and service charges between the Brazilian company and the group should be documented under these rules.

The consumption tax reform (2026–2033)

Constitutional Amendment 132/2023 and Complementary Law 214/2025 replace the current consumption taxes with a federal contribution (CBS) and a state and municipal tax (IBS). The transition rules (arts. 125 to 129 of the Transitional Provisions of the Constitution) are:

• 2026: test year, with CBS at 0.9% and IBS at 0.1%, offset against PIS and Cofins.
• 2027: PIS and Cofins are extinguished and CBS is charged in full; IPI rates are reduced to zero, except for products whose manufacture receives incentives in the Manaus Free Trade Zone.
• 2029 to 2032: ICMS (state) and ISS (municipal) are gradually replaced by IBS.
• 2033: ICMS and ISS are extinguished.

The reform changes prices, credits and the cash flow of the whole supply chain, so long-term contracts, pricing clauses and supplier choices should be reviewed now.

Checklist

• Simulate real and presumed profit before the beginning of each year.
• Plan dividend distributions considering the 10% withholding tax and any applicable tax treaty.
• Document intercompany transactions under the transfer pricing rules.
• Review contracts with price clauses that will be affected by CBS and IBS.
• Prepare systems and invoicing for the new taxes during the transition.

Frequently asked questions

Legal references

• Law 9,718/1998 (presumed profit)
• Complementary Law 224/2025
• Simples Nacional (Complementary Law 123/2006)
• Law 15,270/2025 (tax on dividends)
• Transfer Pricing Law (Law 14,596/2023)
• Constitutional Amendment 132/2023 (tax reform)
• Complementary Law 214/2025 (IBS, CBS and Selective Tax)

Links to the official text of the laws (in Portuguese). This guide is general information and does not replace advice on a specific case.

Other guides

• Setting up a company in Brazil: a practical guide for foreign investors
• Hiring employees in Brazil: labor rules for foreign employers