SAO PAULO (Reuters) -Brazil's government late on Thursday published an executive order that effectively rolls out a minimum 15% tax on profits of multinational corporations, a publication in the country's official gazette showed.
WHY IT'S IMPORTANT
Brazil's government has been seeking new sources of revenue to meet fiscal targets that include reducing its fiscal deficit to zero. It says the new move is in line with global efforts to combat tax evasion.
DETAILS
The executive order sets an additional levy on Brazil's social contribution tax on corporate income (CSLL) to make sure the minimum taxation stands at 15%, according to the publication.
Brazilian officials had previously said the move was being considered both as a way to align the country with tax discussions it has been addressing as chair of the G20 and to ensure that the 2025 fiscal goal is met.
BY THE NUMBERS
Almost 1,000 companies currently paying less than 15% might be subject to the tax starting next year, Brazil's Finance Ministry said. It expects the move to boost tax revenues by 3.4 billion reais ($623.5 million) in 2026 and 7.3 billion reais in 2027.
KEY QUOTES
The move comes as Brazil "adapts to the Global Anti-Base Erosion Rules (GloBE Rules) elaborated by the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting," the government said.
"Brazil is a low-tax jurisdiction for some multinational groups due to the granting tax incentives."
ADDITIONAL BACKGROUND
The Organization for Economic Cooperation and Development last year released a handbook on the mechanism, advocating that it ensures that large multinational companies pay a minimum tax on their profits in all jurisdictions where they operate to deter profit-shifting to tax-favorable locations.
Executive orders in Brazil have immediate validity but must be endorsed by lawmakers within four months or they expire.
($1 = 5.4531 reais)