Brazil: Implemented Normative Instruction No. 2,228 introducing Social Contribution on Net Profit

On 3 October 2024, Normative Instruction No. 2,228, which introduces the Social Contribution on Net Profit (CSLL) in alignment with the Global Anti-Base Erosion (GloBE) Rules, comes into force. The instruction regulates the adaptation of Brazil's tax system to the GloBE rules, including the implementation of a minimum effective tax rate of 15% for multinational groups. The instruction is applicable to constituent entities of a multinational enterprise group with annual revenues of at least EUR 750 million in the consolidated financial statements of the ultimate parent entity for at least 2 of the 4 fiscal years immediately preceding the year under review. The terms "Group," "Multinational Enterprise," and "Entity" are defined, and the instructions set forth rules for permanent establishments and excluded entities. The instruction provides guidance on the calculation of GloBE profits or losses, the adjustment for deferred taxes, and the handling of international transactions. The legislation includes transitional provisions for the implementation of the new rules and for ensuring compliance by entities located in Brazil. Furthermore, the administrative and reporting obligations for these entities are outlined, and penalties are specified for non-compliance. Special rules for calculating effective tax rates and adjusting financial data are applied to ensure accurate compliance with the OECD/G20 BEPS initiative. Finally, the instruction specifies the gradual implementation timelines and the detailed reporting standards for entities affected by these changes.