New regulations restrict federal tax benefits and alter rules for Lucro Presumido and Juros Sobre Capital Próprio.

Lei Complementar No. 224/2025 was enacted on December 26, 2025, providing for the linear reduction, limitation, and redefinition of criteria for granting federal tax, financial, and credit incentives. Subsequently, the statute was regulated by Decreto (Decree) No. 12.208/2025, Portaria (Ordinance) MF No. 3.278/25, and Instrução Normativa (Normative Instruction) No. 2.305/2025.

This regulatory framework is part of the ongoing fiscal adjustment measures and introduces significant impacts on corporate taxation, effective as of 2026.

Although presented under the guise of increasing transparency and rationality in tax expenditure policies, the new law introduces structural changes that require close attention from companies, particularly regarding the Lucro Presumido (Brazilian simplified corporate tax regime in which taxable profit is calculated by applying statutory profit margins to gross revenue, regardless of actual profitability) regime and the remuneration of partners by Juros sobre o Capital Próprio (JCP – Brazilian tax-deductible return on shareholders’ equity, treated as a deemed interest payment to equity holders).

Taxes Affected

The proportional cut impacts tax breaks related to several federal taxes, including:

1. Taxation on Profits: Affecting Corporate Income Tax (IRPJ) and Contribuição Social sobre o Lucro Líquido (CSLL – Brazilian federal levy calculated on taxable profit, parallel to corporate income tax, earmarked for social security funding);
2. PIS/Pasep and Cofins (Brazilian federal gross-revenue-based taxes, legally classified as “social contributions”, imposed on companies’ gross receipts rather than net income): Including import operations;
3. Trade and Industry: Affecting Import Tax (II) and Imposto sobre Produtos Industrializados (IPI – Brazilian federal indirect tax levied on the manufacture and importation of industrialized goods, assessed on product value and collected under a non-cumulative regime);
4. Social Charges: Including the employer’s social security contribution.

Main Changes

Among the changes promoted by Lei Complementar No. 224/2025, the following stand out:

1. Standard Taxation System and Global Cap for Tax Incentives
   The law establishes a “standard taxation system” for certain taxes, such as the mandatory choice of the Lucro Real (Brazilian taxable profit calculated from actual profits, adjusted according to tax law) method for IRPJ and CSLL, aiming to systematize comparative models.
   
   
2. Linear Reduction Methodology
   The new fiscal guideline establishes a linear reduction of 10% across a broad range of federal tax incentives, directly affecting taxes such as the Corporate Income Tax (IRPJ), the CSLL, the IPI, the Import Tax, and the employer’s social security contribution, as well as PIS/Pasep and Cofins (including import transactions).
   
   The application of this reduction varies according to the legal structure of the benefit. In cases of exemption or zero-rate taxation, taxpayers will henceforth be required to pay an amount equivalent to one-tenth of the standard rate applicable under the relevant regime, without giving rise to any entitlement to new tax credits. Where reduced rates apply, the calculation will be based on a composite rate consisting of 90% of the preferential rate and 10% of the full statutory rate.
   
   With respect to financial or tax credits, their utilization will be limited to 90% of the corresponding amount, with the remaining portion being cancelled, except for vested or duly recorded rights accrued up to the end of 2025. Finally, tax regimes based on gross revenue will see their applicable tax percentages increased by 10%.
   
   
3. Increase in the Lucro Presumido
   The statute provides for a 10% increase in the presumed profit tax base applicable under the Lucro Presumido regime for legal entities with annual gross revenue exceeding BRL 5,000,000.00 (five million reais).
   
   In practical terms, this means that activities currently subject, for example, to a 32% presumption rate will henceforth apply a presumed base equivalent to 35.2%, with direct effects on the calculation of Corporate Income Tax (IRPJ) and the CSLL.
   
   The measure represents an indirect reduction in the attractiveness of the regime, particularly for service providers and operating companies whose actual profit margins are lower than the statutory presumptions.
   
   According to the Normative Instruction, compliance with this revenue threshold will be monitored through quarterly assessments, using as reference the cumulative gross revenue accrued since the beginning of the calendar year. This monitoring framework tends to generate a more pronounced tax impact for companies that exceed the threshold at any point during the fiscal year.
   
   
4. Increase in the Withholding Income Tax Rate on JCP
   Another relevant change is the increase in the withholding income tax rate levied on Juros sobre o Capital Próprio, which rises from 15% to 17.5%.
   
   This increase directly affects tax planning structures that rely on JCP as a mechanism for remunerating partners and shareholders, reducing part of the tax efficiency historically associated with this instrument.
   
   
5. Changes in the Betting Market
   The measure expands the regime of third-party tax liability within the betting market to encompass financial institutions and advertising agents, with potential contentious repercussions. The tax rate applicable to Gross Gaming Revenue (GGR) will be progressively increased, rising from the current 12% to 13% in 2026, 14% in 2027, and reaching 15% in 2028. The additional revenues generated by this increase will be allocated to social security funding and public health initiatives.
   

Effective Date and Tax Anteriority

The Normative Instruction establishes a phased timetable for the entry into force of the restrictions on tax incentives:

1. Effective as of January 1, 2026: applicable to tax relief measures related to IRPJ and the Import Tax.
2. Effective as of April 1, 2026: applicable to the other taxes covered by the regulation.

Protected Tax Benefits

The recent policy aimed at reducing tax incentives will not affect strategic sectors or vested rights. The measure fully preserves constitutional tax immunities and the Simples Nacional (Brazilian unified tax regime for small and medium-sized enterprises, combining multiple federal, state and municipal taxes into a single monthly payment based on gross revenue). It also maintains the tax benefits applicable to the Manaus Free Trade Zone (and Free Trade Areas), exemptions granted to nonprofit philanthropic entities, and incentives granted for a fixed term subject to onerous conditions for their enjoyment, among other exceptions. These safeguards are intended to ensure legal certainty and the continuity of essential social and regional policies.

Strategic Considerations

Lei Complementar No. 224/2025 forms part of a broader movement toward the compression of federal tax incentive policies, marked by the imposition of global limits, increased procedural rigidity, and a reduction in discretionary space for future concessions.

In this context, particular attention is recommended with respect to:

1. Reviewing the tax regime currently adopted;
2. Reassessing corporate structures and profit distribution mechanisms;
3. Evaluating the combined impacts arising from the transition period of the new consumption tax system, whose implementation (testing phase) begins in 2026;
4. Mapping current tax benefits (zero rates, presumed credits, and tax base reductions) and calculating the resulting effective tax burden.
   

Our team continuously monitors legislative developments and remains available to assess the specific impacts of the new law, as well as to assist in defining the most appropriate tax strategies for the upcoming fiscal years.