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  • Import Duty and the Limits of the Tax Reform

    Import Duty and the Limits of the Tax Reform

    The debate over the taxation of foreign consumer goods, popularly known in public discussions as the “blusinhas tax”, raises important questions about the scope of fiscal changes in Brazil. One of the central aspects of this discussion is the relationship between these products and the new fiscal rules under development.

    The limit of the tax reform

    The current tax reform proposes significant changes to the way consumption is taxed in the country. However, the Imposto de Importação (Import Duty, a federal tax levied on the entry of foreign goods into national territory) was left out of the main scope of this reform.

    This means that the rules and rates governing direct imports of products by end consumers were not altered or unified by the text of the tax reform itself, maintaining a dynamic parallel to the changes that will affect the domestic market.

    Asymmetry with domestic industry

    The exclusion of the Import Duty from the tax reform has a direct impact on competition in the Brazilian market. The main consequence is the persistence of an asymmetry between imported products and those manufactured by domestic industry.

    As local industry transitions to a new consumption tax system, the absence of a simultaneous revision of the Import Duty preserves an unbalanced scenario. Domestic companies continue to operate under a tax burden distinct from that applied to international shipments, which affects competitiveness and retail pricing.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.

  • PIS/Cofins Tax Credits After 2027: Risks of the Tax Reform

    PIS/Cofins Tax Credits After 2027: Risks of the Tax Reform

    The Tax Reform Landscape and PIS/Cofins

    The current tax reform under discussion in Brazil brings profound changes to the business environment. For executives and foreign investors, a major point of attention involves the future of current taxes, especially regarding PIS/Cofins credits after 2027.

    PIS and Cofins are federal gross revenue contributions that historically allow the accumulation of tax credits, which companies use to offset taxes owed. However, the reform text presents specific challenges for taxpayers whose entitlement to these credits has been recognized through court decisions.

    The Absence of a Transition Rule

    The main risk identified at the current stage of the tax reform is a significant regulatory gap. To date, there is no clear transition rule for PIS/Cofins credits that have been judicially recognized and need to be utilized after 2027.

    Transition rules are legal mechanisms designed to ensure that the shift from an old law to a new one occurs predictably. The absence of this mechanism means companies lack exact guidelines on how, or whether, they can offset these accumulated amounts under the new framework.

    Legal Uncertainty for Companies

    The lack of definition regarding judicial credits after 2027 generates a scenario of legal uncertainty. For organizations, tax credits recognized by the courts represent significant financial assets. Uncertainty over their future utilization directly impacts financial planning and risk assessment for Brazilian operations.

    Without statutory clarity, companies face difficulties in projecting their long-term tax costs. Ongoing monitoring of the tax reform debates is essential so that businesses can adapt to potential solutions introduced to address this gap.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.

  • Government Action Against Discord Focuses on Minor Protection

    Government Action Against Discord Focuses on Minor Protection

    The government filed an action against the communication platform Discord, alleging failures in protecting minors and vulnerable groups. The measure reflects the authorities’ increased attention to information security and access control in digital environments.

    Focus on Protection and Supervision

    The government action aims primarily to compel the platform to adopt stricter technical measures for user control. According to disclosed information, the government’s demands specifically require the implementation of:

    • Robust age verification mechanisms: to control access to platform areas and prevent the exposure of children and adolescents.
    • Parental supervision tools: to allow guardians to monitor and limit minors’ interactions within the digital environment.

    Impact on Technology Companies

    The requirement for age verification mechanisms and parental control demonstrates a strict approach regarding the operational responsibilities of digital platforms. For technology companies, the case highlights the need to integrate safety tools aimed at vulnerable groups, mitigating risks of state intervention and ensuring compliance with regulatory demands.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.

  • Provisional Measure Extends Drawback for Companies Affected by US Tariffs

    The Brazilian federal government published Provisional Measure (MP) 1,386 in the Federal Official Gazette (DOU), authorizing the extension of tax suspension deadlines under the special drawback suspension regime. The initiative, part of the Plano Brasil Soberano 3, aims to mitigate the impacts on Brazilian companies resulting from additional tariffs imposed by the United States.

    Under the new rule, companies with export commitments affected by these altered access conditions to the US market may obtain up to 12 additional months to fulfill their obligations. According to MDIC (Brazil’s Ministry of Development, Industry, Commerce, and Services), the measure aims to provide greater flexibility for companies to maintain sales to the United States or redirect products to new markets, preserving national export capacity.

    How the Drawback Suspension Regime Works

    The drawback suspension is a special customs regime designed to stimulate the competitiveness of Brazilian exports. It allows companies to purchase or import specific inputs used in manufacturing export-bound products with a suspension of the taxes levied on these transactions.

    In exchange for the tax suspension, the beneficiary company formally commits to exporting the final products within a timeframe specified in the concession act (ato concessório). In simple terms, the regime’s cycle involves government authorization, purchasing or importing inputs, manufacturing the product, and ultimately completing the export within the established deadline. MP 1,386 aims to assist companies facing difficulties in fulfilling this cycle due to the new trade scenario with the United States.

    Eligibility Criteria to Request the Extension

    The Provisional Measure establishes specific conditions for companies to request a deadline extension of up to one year. To be eligible, companies must meet the following main requirements:

    • Hold a drawback suspension concession act with an expiration date between July 22 and December 31, 2026;
    • Prove that the export commitment was directly affected by the additional tariffs imposed by the United States.

    Notably, the extension also covers intermediate manufacturer companies. These are businesses that use drawback to acquire inputs and manufacture parts or components that are subsequently supplied to another company responsible for manufacturing the final product for export.

    Economic Impact and Pending Regulation

    The drawback regime is one of the federal government’s primary foreign trade instruments. In 2025, companies using the suspension modality accounted for US$ 72.8 billion in exports, representing 20.9% of Brazil’s total exports during that period (US$ 348 billion). In total, 1,791 companies utilized the regime last year.

    The range of exports to the United States supported by the regime is diversified. Exported goods include wood products, worked stones, chemical products, doors, footwear, transformers, meat, furniture, as well as machinery and equipment.

    Despite the enactment of MP 1,386, the practical application of the new rules still depends on regulation by Secex (the Foreign Trade Secretariat) under MDIC. A forthcoming ordinance will define the procedure for submitting extension requests and list the documentation required to demonstrate the impact of US tariffs on company operations.

    The government clarified that the measure does not constitute a new revenue waiver and generates no budgetary or financial impact, as it applies to concession acts that had already been granted previously.

    Practical Considerations

    The deadline extension offers meaningful operational relief for exporting industries facing recent tariff barriers. Companies operating under the drawback suspension regime with expirations in the second half of 2026 should begin gathering data and records showing the impact of US tariffs on their supply and commercial chains, preparing for the requirements of the upcoming Secex ordinance.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.

  • STF Upholds Law Barring Habitual Tax Defaulters from Judicial Reorganization

    STF Upholds Law Barring Habitual Tax Defaulters from Judicial Reorganization

    The STF (Brazil’s Supreme Federal Court) unanimously upheld the validity of the rule barring companies classified as habitual tax defaulters from seeking judicial reorganization. The restriction is established in the Taxpayer Defense Code (Supplementary Law 225/2026) and represents an important milestone at the intersection of tax law and corporate restructuring in Brazil. The decision was rendered on August 21 in the Court’s virtual plenary session.

    The concept of the habitual tax defaulter and the administrative process

    Supplementary Law 225/2026, whose rules were approved by the Chamber of Deputies in December, introduced the concept of the habitual tax defaulter into the Brazilian legal system. This category includes companies that engage in repeated default, using non-payment of taxes as a business strategy to gain a competitive advantage in the market.

    According to the Receita Federal (Brazil’s Federal Revenue Service), the primary objective of the measure is to strengthen tax compliance, foster fair competition among economic agents, and provide greater transparency to tax audit actions. The agency expressly highlights that the initiative does not target companies facing temporary financial hardship. The focus is exclusively on cases where default is deliberately planned.

    By July, the Receita Federal had already classified 22 legal entities under this category. However, it is worth noting that classifying a company as a habitual tax defaulter does not occur summarily or automatically. The legislation requires prior administrative proceedings, ensuring the taxpayer’s right to present a defense before final classification.

    The STF ruling and the dismissal of the OAB petition

    The validity of the rule was challenged at the STF through a lawsuit filed by the Ordem dos Advogados do Brasil (OAB, the Brazilian Bar Association). The professional body argued that barring access to judicial reorganization would impede access to justice. Furthermore, the OAB claimed that the measure would constitute a coercive and indirect method of tax collection by the State.

    However, the Court’s virtual plenary session rejected the request to suspend this provision. The view of the reporting justice, Justice Flávio Dino, prevailed, with his opinion fully joined by Justices Alexandre de Moraes, Cristiano Zanin, Edson Fachin, André Mendonça, Gilmar Mendes, Dias Toffoli, Luiz Fux, and Nunes Marques.

    In his vote, Justice Flávio Dino highlighted that the law establishes a legitimate mechanism for the State to protect itself against companies that repeatedly fail to pay taxes. The reporting justice stated that the principle of corporate preservation, which underpins judicial reorganization, should only benefit productive units operating under good faith and tax compliance.

    “The principle of corporate preservation must apply to units operating under good faith and tax compliance, a scenario incompatible with the conduct of a habitual defaulter who incorporates the non-payment of taxes, I reiterate, into its business model,” stated the reporting justice.

    Impacts and legal restrictions on companies

    In addition to being barred from seeking judicial reorganization, classification as a habitual tax defaulter brings several other severe sanctions for corporate entities. Under the rules validated by the STF, a company formally placed in this category is subject to:

    • Loss of tax benefits: The legal entity is barred from using tax incentives granted by public authorities.
    • Ban on government contracting: The company loses the right to participate in public biddings and enter into contracts with the Public Administration.
    • Maintenance of criminal liability: In cases of tax crimes, subsequent payment of the tax owed does not extinguish criminal liability, unlike the treatment applied to standard taxpayers.

    Practical considerations

    The STF decision consolidates the view that judicial reorganization is a mechanism intended to overcome genuine economic and financial distress, and cannot serve as a shield for strategic tax default. For foreign investors, executives, and founders operating in Brazil, this development reinforces the need to maintain rigorous corporate governance and tax compliance policies.

    The clear distinction made by the Receita Federal and endorsed by the STF between temporary financial distress and deliberate default requires companies to keep their accounting and tax obligations in strict compliance. Avoiding administrative classification is essential to prevent jeopardizing future corporate restructurings or commercial engagements with the public sector.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.

  • Limits on Big Tech Bans of Business Accounts

    Limits on Big Tech Bans of Business Accounts

    The digital environment has become the primary commercial space for many companies. In this scenario, the banning of business accounts by major technology platforms, known as Big Tech, raises important questions about the limits of these companies’ power in controlling their virtual spaces.

    Legal limits on platform authority

    Although digital platforms have their own terms of use, deleting or suspending corporate profiles does not occur in a legal vacuum. Brazilian legislation sets parameters that limit these actions, protecting business users against arbitrary decisions.

    Two prominent legal instruments in this debate are the Consumer Defense Code (CDC) and the Marco Civil da Internet (Brazil’s Civil Rights Framework for the Internet). The CDC can apply to balance the relationship between the platform and the business user, ensuring transparency and preventing abusive practices. Meanwhile, the Marco Civil da Internet serves as the primary guide for rights and duties in Brazil’s digital environment, reinforcing the need for clear justifications to remove content or suspend accounts.

    Horizontal application of fundamental rights

    Another central concept in discussions on account banning is the horizontal application of fundamental rights, a legal principle establishing that basic constitutional rights must be respected not only by the State, but also in private relationships between companies and individuals.

    Applied to the context of Big Tech, this principle means that safeguards such as due process and the right to a full defense must be considered before deleting a business account. Even though platforms are private entities, they exercise a role with significant public impact and must therefore observe these rights when enforcing internal policies.

    Considerations for the corporate environment

    The deletion of a commercial profile can severely affect a company’s operations. Understanding that the power of digital platforms is limited by the CDC, the Marco Civil, and fundamental rights is an essential step for organizational governance and digital risk management.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.

  • China reviews new cross-border anti-corruption draft law

    China reviews new cross-border anti-corruption draft law

    China’s top legislative body has begun reviewing a draft law aimed at combating cross-border corruption. The measure represents Beijing’s latest effort to expand the reach of its anti-corruption legal framework beyond its borders.

    Legislative progress and scope of the draft

    The draft Cross-Border Anti-Corruption Law was submitted for its first reading during the 24th session of the Standing Committee of the 14th National People’s Congress (NPC). Although the full text is not yet available to the public, the proposal comprises six chapters and 47 articles, establishing fundamental principles, scope of application, and the national stance regarding overseas corruption.

    According to state news agency Xinhua, enacting this law is an essential step toward completing China’s foreign-related legal framework. The new legislation aims to protect national interests and promote overseas business growth in compliance with governance rules.

    Focus on asset recovery and repatriation

    The draft bill consolidates a decade of anti-corruption practices aimed at closing jurisdictional loopholes and tackling financial crimes in offshore jurisdictions. The state news agency highlighted that the law seeks to enhance the legal tools available for repatriating fugitives and recovering assets.

    Among the primary systemic obstacles the legislation intends to address are historical difficulties in detecting crimes, collecting evidence, recovering illicit assets, and prosecuting offenders located outside Chinese territory.

    Practical impact on international business

    For companies and investors with operations linked to China, the progress of this legislation reinforces the importance of maintaining robust compliance programs. The expansion of Chinese jurisdiction over overseas corruption practices indicates tighter scrutiny of international business activities, requiring continuous attention to corporate governance standards.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.

  • Braskem Files for R$ 56.5 Billion Out-of-Court Debt Restructuring

    Out-of-Court Restructuring Petition

    Braskem filed a petition for out-of-court debt restructuring (recuperação extrajudicial, a Brazilian statutory mechanism that allows debt renegotiation through a pre-agreed plan between a company and its creditors, subsequently submitted for judicial confirmation). The proceeding involves debts totaling R$ 56.5 billion.

    Creditor Support

    For the renegotiation to move forward and the plan to be consolidated, the company requires the support of a specific proportion of claim holders. Upon filing, Braskem already held formal approval from creditors representing 39.6% of the claims included in the restructuring.

    As the proceeding develops, the company aims to continue negotiations to reach support exceeding 50%. Reaching this threshold is the target sought by the company to enable the restructuring of the submitted debts.

    Corporate Perspective

    This development illustrates the use of out-of-court restructuring as a strategic tool to rebalance large debt volumes, prioritizing direct negotiation and consensus-building with a significant portion of creditors.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.

  • CBS Tax Credits on Inventory During Brazil’s Tax Transition

    CBS Tax Credits on Inventory During Brazil’s Tax Transition

    The transition to the new Brazilian tax system brings important debates for the industrial and commercial sectors. A central issue for companies concerns the treatment of goods acquired before the change. Recent news indicates that existing inventory may generate credits for the Contribution on Goods and Services (CBS, a new federal value-added tax) during this adaptation period.

    The context of the tax transition

    Brazil is overhauling its consumption tax framework. The new system creates the CBS, a federal levy that will unify and replace current taxes. Because this change is not immediate, a transitional period will follow where old and new rules coexist.

    For companies, particularly in retail and manufacturing, this phase requires close attention to inventory flows. The tax treatment of items already produced or purchased that will only be sold under the new rules is a key consideration for executives and foreign investors with Brazilian operations.

    CBS credits on inventory

    Allowing inventory to generate CBS credits aims to prevent economic distortions. When a company purchases inputs or products under the previous tax regime, it incurs the taxes in effect at that time. If sales occur under the new system without appropriate credit recognition, unintended double taxation could increase operational costs.

    Signals that CBS credits will be permitted on existing inventory provide greater predictability. In practice, this means companies can use amounts already paid along the supply chain to offset taxes due under the new system, honoring the non-cumulative principle driving the reform.

    Preparing for the new scenario

    Although the possibility of claiming credits is a positive sign for asset valuation, the scenario demands preparation. Companies must maintain strict controls over:

    • The volume and value of inventory at the moment the system transitions;
    • Tax documentation proving purchases made under the old rules;
    • Accounting criteria for calculating and recording the new credits.

    Monitoring upcoming regulatory definitions for this transition is essential to ensure compliance and financial efficiency during the change of regime.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.

  • Extrajudicial Probate: End of Mandatory Advance ITCMD Payment

    Extrajudicial Probate: End of Mandatory Advance ITCMD Payment

    It was recently reported that extrajudicial probate no longer requires the advance payment of the ITCMD (State Estate and Gift Tax). This change directly impacts how estate settlement and asset distribution are handled outside of the judicial system.

    Understanding the Key Concepts

    To grasp the scope of this measure, it is important to clarify two fundamental concepts:

    • Extrajudicial probate (inventário extrajudicial): an administrative procedure conducted directly at a public notary office (cartório), without the need for court proceedings, used to inventory and distribute the estate left by a deceased individual.
    • ITCMD: the Brazilian state tax levied on the transfer of assets and rights through inheritance or donations.

    End of the Prior Payment Requirement

    The main reported change is the waiver of prior tax payment as a prerequisite for completing the procedure at a notary office. Previously, the requirement for advance ITCMD collection often represented a financial barrier at the beginning of the probate process, as the parties involved had to disburse funds before having formal access to the inherited assets.

    Under the new guideline, advance tax collection is no longer a mandatory condition for drafting the extrajudicial probate deed. This measure allows the administrative procedure to move forward more smoothly at the notary office.

    Practical Considerations

    Exempting the prior payment of ITCMD simplifies the workflow of out-of-court probate, providing greater speed for regularizing assets. This is a relevant development for estate planning and asset management for families and investors in Brazil.

    This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.