Law nº 15.079/24 has established in Brazil the general aspects of the rules provided by the Pillar 2 of OCDE which means an inclusive framework to avoid Base Erosion and Profit Shifting (BEPS) by a charge of a global tax that aims to ensure multinational businesses, with controlled, subsidiaries or related companies incorporated in Brazil, to pay a minimum effective tax rate (ETR) of 15% on their consolidated profits earned by its Final Investing/Controlling Entity in the amount of EUR 750 MM (seven hundred and fifty million euros) or the equivalent in US dollars to $779MM (seven hundred and seventy nine million dollars) or more in the its Consolidated Financial Statements in at least 2 (two ) of the 4 (four) fiscal years immediately preceding the one audited.

The Global Anti-Base Erosion Rules (GloBE) are a key component of this plan and ensure large multinational enterprise pay a minimum level of tax on the income arising in each of the jurisdictions where they operate.

Brazilian IRS has already regulated the new rules by IN RFB nº 2.228/24 your company and its Brazilian subsidiaries, controlled or related companies should carefully evaluate those implications and potential effects on their tax burden and compliance with additional obligations, especially since the new rules are in effect.

Any update or change that results in an increase in the tax burden will be applied to the fiscal year that begins:

I – in the year following the publication of the update or change; or
II – 90 (ninety) days after the publication of the update or change.

Please note if your situation falls into one of the following definitions:

I – group: set of entities that are related through ownership or control rights, or assets, liabilities, revenues, expenses and cash flows and are provided in the Consolidated Financial Statements of the Final Controlling Entity;

II – multinational group of companies: any group that includes at least 1 (one) entity or permanent establishment that is not located in the jurisdiction of the Final Investing Entity;

III – entity: any person with legal personality, except a natural person; or any arrangement, including structure, operation or agreement, that is required to prepare individual financial statements;

IV – investing entity: holds, directly or indirectly, a controlling stake in any other entity; or holds, directly or indirectly, equity interest in another investor entity of the same group of multinational companies;

V – final investor entity: holds, directly or indirectly, a controlling interest in any other entity; or is not held, through controlling interest, directly or indirectly, by another entity; or is the main entity of the group;

VI – group entity, in relation to any entity or group: entity that is a member of the same group;

VII – equity in capital stock: any stake in the capital of an entity that grants rights over the profits, capital or reserves of the entity, including the profits, capital or reserves of the permanent establishment of a main entity;

VIII – controlling interest: stake in the capital of an entity in which the holder of the interest is required to consolidate the entity’s assets, liabilities, revenues, expenses and cash flows on an item-by-item basis in accordance with an

acceptable accounting standard; or would have been required to consolidate the entity’s assets, liabilities, revenues, expenses and cash flows on an item-by-item basis if it had prepared consolidated financial statements;

IX – main entity, in relation to a permanent establishment: entity that includes the accounting net profit or loss of the permanent establishment in its financial statements; and

X – permanent establishment: (a) business facility, including a deemed business facility, situated in a jurisdiction and treated as a permanent establishment in accordance with a tax treaty in force, provided that such jurisdiction taxes the income or profit that is attributable to such business facility; (b) if there is no tax treaty in force, a business facility, including a deemed business facility, in respect of which a jurisdiction taxes, in accordance with its law, the income or profit attributable to that business facility on a similar net basis to which it taxes taxpayers resident there; (c) if a jurisdiction does not have a corporate income or profit tax system, a business establishment, including a deemed business establishment, situated in that jurisdiction, which would be treated as a permanent establishment under the OECD Model Convention; or (d) a business facility, including a presumed business facility, not described above, through which operations are carried out outside the jurisdiction where the entity is located, provided that such jurisdiction exempts income or profit attributable to such operations.

A Final Investing/Controlling Entity means: (i) any entity that is part of a group; (ii) any permanent establishment of a main entity; (iii) investment fund or real estate investment instrument; (iv) any entity that is at least 95% (ninety- five percent)owned directly by other entity, or through a chain of such entities, and that operates exclusively, or almost exclusively, to hold assets or apply resources for the benefit of such investment entity; (v) any entity with at least 85% (eighty-five percent) of its value held by other entity, provided that substantially all of the entity’s income or profit or gains or losses will be excluded from the calculation of GloBE profits or losses in accordance with the provisions of art. 11 of the law; and (vi) investment fund: entity that meets all of the following criteria: (a) is intended to manage financial or non-financial assets of more than 1 (one) investor, some of which are not related to each other; (b) does invest in accordance with a defined investment policy; (c) allow investors to reduce transaction, research and analysis costs or collectively share risks; (d) is intended primarily to generate income, profits or investment gains or, in the case of the insurance sector, protection against a particular or general event or result; (e)

investors have the right to a return on the fund’s assets or on the income or profit received from these assets, based on the contributions they make; (f) the entity or its administration and management are subject to a regulatory regime in the jurisdiction in which it is established or managed, including appropriate regulatory measures to combat money laundering and investor protection; and (g) is administered and managed by fund management professionals on behalf of investors.

PENALTIES:
In case Brazilian taxpayers do not comply with the obligations, or operates with delays, errors or inaccuracies, fines can reach up to 10% of the company’s annual revenue, capped to R$ 5 million.

If you would like to know more about the matter please contact Fischer Law Firm and we will be honored to perform joint efforts pursuing to render the customized support you are looking for.