On December 30, 2024, the government of Brazil published Law 15,079, which went into effect on January 1, 2025. It instituted the Additional Social Contribution on Net Income (Adicional da Contribuição Social sobre o Lucro Líquido, or ACSLL), a tax that applies to multinational entities operating in Brazil. The ACSLL was established in the context of Pillar Two and the OECD’s base erosion and profit shifting (BEPS) project. Law 15,079 states, in Article 2, that the purpose of the ACSLL is to establish a minimum effective tax rate of fifteen percent in the process of adapting Brazilian legislation to the Global Anti-Base Erosion (GloBE) Model Rules drawn up by the Inclusive Framework on Base Erosion and Profit Shifting under the coordination of the Organisation for Economic Co-operation and Development (OECD) and the Group of Twenty (G20).
In addition to aligning with the OECD’s actions, the ACSLL aims to ensure that Brazil does not lose the opportunity to exploit the tax capacity of multinational entities established in its jurisdiction. Otherwise, outside jurisdictions where the relevant controlling or affiliated entities are located will be able to collect the portion of the tax corresponding to the complementation of the minimum taxation on income through instituting the Income Inclusion Rule (IIR) and the Undertaxed Payments Rule (UTPR), unless Brazil institutes a qualified domestic minimum top-up tax (QDMTT). Brazil’s government expressly acknowledged this fiscal objective in the explanatory memorandum accompanying Provisional Measure No. 1,262/2024, which sought to introduce the ACSLL into the Brazilian tax framework. Although this provisional measure no longer has legal force, its provisions were subsequently incorporated into Law No. 15,079.
According to the GloBE Model Rules, the countries where entities belonging to multinational groups with revenues over €750 million are domiciled have priority in collecting a top-up tax so as to ensure that the effective tax rate (ETR) on their income is no less than fifteen percent of the GloBE profit. If the country where the constituent entity is domiciled has not set up a QDMTT according to the GloBE rules, the countries where the controlling entities and affiliated entities of the multinational group are domiciled can charge these entities the top-up tax.
Brazil’s QDMTT takes the form of a social contribution based on income, revenue that the federal government uses exclusively for social security. Social contributions are taxes, and any institution or modification of them must comply with the rules of the Constitution of the Federative Republic of Brazil, the national constitution. These include the rules of nonagesimal anteriority (Article 195, Section 6), legality (Article 150, Item I, and Article 195, Section 4), the fair, equal treatment of taxpayers (Article 150, Item II, and Article 195, Section 6), and consideration of taxpayers’ ability to pay (Article 145, Section 1).
Since the Brazilian constitution establishes that a law mandating social contributions must be in effect for at least ninety days before payment can be assessed (this being the rule of nonagesimal anteriority), the ACSLL, with its effective date of January 1, 2025, applies only to taxable events occurring on or after April 1, 2025. Because the ACSLL taxable event is GloBE profit, the social contribution requirement for 2025 depends on the date that profit was generated.
The ACSLL applies to GloBE profit for the constituent entity’s fiscal year, as defined in its financial statements.1 The law defines the fiscal year as 1) the fiscal year for which the entity prepares financial statements based on real profit or 2) in the event that the entity does not prepare financial statements based on real profit, the fiscal year for which the entity prepares financial statements for commercial purposes.2 Thus, determining the date when GloBE profit is generated follows the same criteria as for the generation of real profit or commercial profit.
Although quarterly financial statements can be used to calculate real profit,3 both the provisions of Law 15,079 and the regulations governing them stem from the premise that GloBE profit will be calculated annually.4 Commercial legislation offers the same premise, which establishes that the fiscal year equals one calendar year.5 Since GloBE profit is calculated based on a series of events that occur over the course of a year (a complex taxable event), it must be concluded that GloBE profit for the fiscal year beginning January 1, 2025, and ending December 31, 2025, cannot be subject to the ACSLL, which came into force only after financial statements for the 2025 fiscal year had already begun.
Furthermore, applying the ACSLL to GloBE profit to be calculated on December 31, 2025, contradicts another part of Law 15,079, which provides that any update or change to the concepts established in the law or its regulations that results in a higher tax burden will be applied in the year following the publication of the update or change and no less than ninety days after the publication of that update or change. In other words, Law 15,079 expressly invokes the constitutional rule of nonagesimal anteriority, with the practical effect of preparing taxpayers for the tax and allowing them to plan their business activity in light of it. Any law that does not comply with the rule of nonagesimal anteriority should be considered ineffective, and the relevant tax, in this case the ACSLL, declared unconstitutional.
The ACSLL’s nonalignment with Brazil’s constitution does not stop there. According to Article 195 of the constitution, society as a whole finances social security through national, state, and municipal budgets. Social security is also financed by various social contributions levied on companies’ payroll and other labor income; revenue or turnover; and profit. If other sources of funding are to be set up in addition to those that Article 195 provides for, a separate complementary law must establish these new sources.6 Although the ACSLL consists of a social contribution levied on profit, as provided for in Article 195, profit is already the triggering event of a separate tax, the Social Contribution on Net Profit (Contribuição Social sobre o Lucro Líquido, or CSLL) established by Law 7,689/1988. But GloBE profit, which triggers the ACSLL, is not the same profit on which the CSLL is levied. The nature of a tax depends on its triggering taxable event. Since the ACSLL and the CSLL have different triggers, they are different taxes on different sources. Thus, the ACSLL actually establishes a new source—a new and different type of profit—to fund social security, but without the required enactment of a complementary law. That Law 15,079 is not a complementary law is yet another violation of Brazil’s constitution.
The constitutional violation that most affects Brazilian tax policy, however, is the ACSLL’s violation of the equal treatment of taxpayers. Subjecting entities established in Brazil to the ACSLL because they belong to multinational groups with revenues over €750 million discourages the development of tax policy concerning the export of capital, which the Brazilian economy needs in order to mature.
The distinction between entities belonging to national and multinational groups is not a legitimate criterion, since it bears no relation to the fiscal purpose underlying the ACSLL. Taxes instituted for fiscal purposes may differentiate taxpayers based only on their ability to pay, as stated in Article 145, Section 1, of the constitution. This standard is intrinsic to the tax’s revenue-generating objective. In contrast, a company’s membership in a national or multinational group is irrelevant to its ability to pay. Accordingly, such a criterion neither promotes tax equity nor enhances revenue collection. It does not mitigate any disparities arising from the tax treatment of different corporate structures. Distinguishing between national and multinational companies is not only unconstitutional but may also disincentivize Brazilian companies from investing abroad through permanent establishments, subsidiaries, and affiliates, since formerly domestic companies may now be reclassified as multinational and thereby become subject to the ACSLL.
Not only is the national/multinational distinction irrelevant to the primary purpose of the ACSLL, but it also disregards the constitutional provisions for exceptions in equal tax treatment. According to Article 195, Section 9, any distinction in calculating a company’s social contribution depends exclusively on its economic activity, its intensive use of labor, the size of the company, and the structural condition of the labor market. Given that the central trigger for the ACSLL is membership in a multinational group, it’s a distinction that is incompatible with the Brazilian constitution.
Last, the ACSLL clearly violates the constitutional requirement that taxation be based on the taxpayer’s ability to pay, which pertains to the individual domestic entity, not to the corporate group as a whole. The mere fact of belonging to a multinational group—the triggering condition for the ACSLL—does not, in itself, demonstrate that the Brazilian entity has the requisite capacity to bear an additional levy. The constitutional requirement of “ability to pay” is inherently individual to the taxpayer. In contrast, membership in an international group with global revenues exceeding €750 million is an external circumstance that does not necessarily reflect or enhance the individual taxpayer’s ability to pay.
All these constitutional violations are causing taxpayers subject to the ACSLL to seek judicial protection from it. However, Law 15,079 provides that the ACSLL will be considered unpaid if it is directly or indirectly the subject of judicial or administrative litigation, and the multinational group of companies cannot use the tax as a credit in the application of the GloBE Model Rules in any circumstance, tax year, or jurisdiction.7 These conditions clearly violate Brazil’s constitution, which guarantees free access to justice. The violation occurs because the contribution will be considered unpaid, even if it has been paid, simply because it is the subject of litigation. Imagine a situation in which the taxpayer pays the tax but questions its excessive or even unconstitutional collection. Even an excessive payment will be considered as not having been made, and the taxpayer cannot take it into account for calculating the group’s ETR. The mere fact of seeking judicial protection should not have negative effects that impede a taxpayer’s free access to justice.
These questions will be brought before the Brazilian courts, most likely by entities belonging to multinational groups not subject to the IIR and UTPR, since the effects of litigation on these groups will be restricted to Brazilian jurisdiction. It remains to be seen whether the Brazilian courts, and especially the Supreme Court, will prioritize the defense of the Brazilian constitutional tax system or the opportunity to guarantee a new source of revenue for the federal government.
Cláudio Mangoni Moretti is a partner and head of the tax practice at Trench Rossi Watanabe Advogados.
Endnotes
- Article 11 of Law 15,079/2024.
- Article 5, Item XV, of Law 15,079/2024.
- Article 1 of Law 9,430/1996.
- See Article 3, Item XXVII, of RFB Normative Instruction 2,228/2024, as amended by RFB Normative Instruction 2,228/2025. The exception occurs in cases where the entity is wound up without succession of its assets and liabilities.
- Article 175 of Law 6,404/1976.
- Article 195, Section 4, of the Brazilian constitution.
- Article 36.
