The regime choice
Brazil has three main corporate tax regimes. Simples Nacional, the simplified regime for small businesses, is not available to companies with a partner domiciled abroad. Foreign-owned companies therefore choose between:
- Lucro Presumido (deemed profit): corporate income tax and social contribution are calculated on a presumed profit margin applied to gross revenue (for example, 32% for most services). Simpler bookkeeping and often efficient for high-margin service businesses. Available below a revenue threshold.
- Lucro Real (actual profit): tax on accounting profit adjusted by tax rules. Mandatory above the revenue threshold and for certain activities, such as financial institutions. Appropriate for businesses with low margins, start-up losses or significant deductible costs.
The election is made annually and should be modelled before the first invoice.
The main taxes
| Tax | Level | Applies to |
|---|---|---|
| IRPJ (corporate income tax) and CSLL (social contribution on profit) | Federal | Profit, presumed or actual; combined nominal rate around 34% on profit |
| PIS and COFINS | Federal | Gross revenue, cumulative or non-cumulative depending on regime |
| ISS | Municipal | Services, rates typically 2%–5% |
| ICMS | State | Sale of goods and some services; rates vary by state and product |
| IPI | Federal | Manufactured goods, at import and at the factory gate |
| Payroll charges | Federal | Social security, severance fund and other contributions on salaries |
Dividends and remittances
Since 2026, profits and dividends paid, credited or remitted to shareholders abroad are, as a general rule, subject to Brazilian withholding income tax at 10% under Law 15,270/2025, which ended the general exemption that applied since 1996. Specific rules apply to certain situations and periods, and treaty positions must be assessed case by case. Remittances require the investment to be registered with the Central Bank. Interest, royalties and service fees paid abroad are subject to withholding tax, at rates that may be reduced by double-tax treaties; Brazil has treaties with many European, Latin American and Asian countries, though not with the United States or the United Kingdom, where other mechanisms apply.
Electronic invoicing and digital bookkeeping
Brazilian companies issue electronic tax invoices for every sale and file digital bookkeeping and dozens of periodic returns. This is why a licensed local accountant is not optional, and why the accounting desk should be coordinated with the tax lawyers who chose the regime.
The consumption-tax reform
A constitutional amendment approved in 2023 replaces PIS, COFINS, IPI, ICMS and ISS with two value-added taxes: a federal CBS and a shared state-municipal IBS, plus a selective tax on specific goods. The transition runs over several years, with the new taxes phased in and the old ones phased out. During the transition, companies operate under both systems, and the impact on pricing, credits and compliance differs by sector. We track the calendar for each client.
Transfer pricing and intercompany flows
Brazil aligned its transfer pricing rules with the OECD arm's-length standard from 2024. Intercompany services, royalties, financing and goods flows between a Brazilian subsidiary and its foreign group must be documented and priced accordingly.
Practical takeaways
- Do not plan around Simples Nacional; it is not available to foreign-owned companies.
- Model Lucro Presumido against Lucro Real before the first invoice.
- Register the capital with the Central Bank so profits can actually be remitted.
- Treat the tax reform as a multi-year project, not a one-off change.