Tax reform project in Brazil


published on 5 July 2021 | reading time approx. 2 minutes


On 25 June 2021, the Federal Government presented the project for the second phase of the Tax Reform. The first phase of the Reform began in 2020, under Law Project No. 3887/2020, in which the main point is the extinction of PIS and COFINS contributions and the creation of the Social Contribution on Operations with Goods and Services (CBS).



In this second phase, the project proposes changes related to corporate and individual income tax (IRPJ and IRPF). It also brings changes in the taxation of financial investments.

Below are the main points for companies:

  • Corporate Income Tax Reduction: According to the project, in 2022 the current rate of 15 per cent of IRPJ will become 12.5 per cent. In 2023, the percentage should drop to 10 per cent. However, the additional 10 per cent for profits above BRL 20.000 per month remains.
  • Quarterly Corporate Income Tax payment: The proposal provides for the quarterly payment of Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL) to all companies. Today, there are two options: quarterly and yearly.
  • Interest on Equity (JSCP): The project prohibits the possibility of deducting the value of equity interests (JSCP) from the calculation basis of IRPJ and CSLL.
  • Profits and Dividends: The project stipulates the taxation of dividends at a rate of 20 per cent at the paying source. Dividends are currently exempt from income tax. There is a forecast, however, of an exemption of up to BRL 20.000 per month for micro and small businesses.


In addition to taxation relating to legal entities, the proposal also wants to change rules relating to income tax on individuals (IRPF). For example, updating the personal income tax progressive table:


Current Rages (BRL)New proposal Rages (BRL)Rates
Until 1.903,98Until 2.500(exempt)
From 1.903,99 to 2.826,65From 2.500,01 to 3,2007,50 %
From 2.826,66 to 3.751,05From 3,200,01 to 4.25015 %
From 3.751,06 to 4.664,68From 4.250,01 to 5.30022,50 %
Above de 4.664,68Above de 5.300,0127,50 %


Regarding investments, the project changes the taxation of fixed income assets, such as Treasury Bonds and CDB and open and closed funds, providing for a single 15 per cent rate. There is an expected end to the exemption on income distributed to individuals in the case of Real Estate Investment Fund (FII) with shares traded on the stock exchange from 2022.

The Tax Consulting team is available for further clarification on this relevant topic. Contact our tax team at

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