Corporate Tax in Brazil for Foreign-Owned Companies (2026)

Reviewed by Luiz Eduardo da Silva, director of LegalBR. Updated on 15 October 2026. About 12 minutes to read.

Corporate tax in Brazil for a foreign-owned company comes down to four decisions: the income tax regime, how sales are taxed while the consumption tax reform phases in, what payroll costs, and how profits leave the country. The headline rate on profit is 34% for most companies, and since January 2026 dividends paid abroad bear 10% withholding tax. This guide maps the whole system as it stands in October 2026.

How corporate tax in Brazil is structured

Brazil taxes companies at three levels of government. The federal government collects income taxes, federal contributions on revenue and payroll contributions. The 26 states and the Federal District collect the tax on goods (ICMS), and more than 5,500 municipalities collect the tax on services (ISS). As a result, a new subsidiary registers with the Federal Revenue (Receita Federal), with the state finance department if it sells goods, and with the city where it is based.

The legal form does not change the tax rate. An Ltda, an SLU and an S.A. pay the same taxes; what changes is the paperwork and some governance rules. Our guide on types of companies in Brazil covers that choice. What really drives the tax bill is the income tax regime, the type of revenue and the way the group moves money between Brazil and abroad.

Choosing a regime: Lucro Real or Lucro Presumido

Brazil has three income tax regimes, but a foreign-owned subsidiary normally has only two to choose from. The Simples Nacional, the unified regime for small businesses, is closed to any company that has another legal entity as a partner and to branches of foreign companies (Complementary Law 123/2006, article 3, paragraph 4). It is also closed when a partner is domiciled abroad (article 17). In practice, therefore, the choice is between the two regimes below.

Lucro Presumido (presumed profit)

Under Lucro Presumido, the company does not calculate its actual profit for tax purposes. Instead, it applies a fixed percentage to gross revenue and pays IRPJ and CSLL on that presumed profit every quarter. The percentages are, in general, 8% (IRPJ) and 12% (CSLL) for trade and manufacturing, and 32% for both taxes for most services. The regime is available to companies with gross revenue of up to R$ 78 million in the previous year.

However, Complementary Law 224/2025 changed the math from 2026. The presumption percentages now rise by 10% on the portion of annual revenue above R$ 5 million. For a service company, for example, the 32% base becomes 35.2% on that excess. The increase applied to IRPJ from January 2026 and to CSLL from April 2026, and the limit is checked quarterly at R$ 1.25 million per quarter.

Lucro Real (actual profit)

Lucro Real taxes accounting profit adjusted by the tax rules. It is mandatory above R$ 78 million of revenue, for banks and similar institutions, and for companies that earn profits, income or capital gains from abroad, among other cases. It is also the only sensible option when the company expects losses, because tax losses can be carried forward without time limit (although they offset only 30% of each year’s taxable profit).

In addition, Lucro Real uses non-cumulative PIS and COFINS, which allows credits on many inputs. Lucro Presumido uses the cumulative system, with lower rates but no credits. This difference will disappear with the CBS in 2027, which is one more reason to model both regimes before choosing.

The regime is chosen once a year, with the first tax payment of the year, and it binds the whole calendar year. A new company makes the choice with its first payment.

IRPJ and CSLL rates

The corporate income tax (IRPJ) is 15% of taxable profit, plus a 10% surtax on the portion above R$ 20,000 per month (R$ 240,000 per year). The social contribution on net profit (CSLL) is 9% for most companies. Together, they reach the familiar 34%. Banks, insurers and other financial businesses pay higher CSLL, and LC 224/2025 raised the rates for some of them, such as payment institutions and exchanges.

Under Lucro Real, companies pay either quarterly on actual results or monthly on estimates with an annual adjustment. Under Lucro Presumido, payment is quarterly. In both cases, the effective rate on revenue depends heavily on margins. A consulting company with a 40% margin, for instance, may pay less under Presumido; a distributor with a 5% margin usually pays less under Real.

Taxes on sales: PIS, COFINS, ICMS, ISS and the CBS/IBS transition

Until the end of 2026, sales are taxed by a patchwork. PIS and COFINS are federal contributions on revenue. ICMS is the state tax on goods, interstate transport and communications, with standard internal rates that vary by state, generally between about 17% and 23%. ISS is the municipal tax on services, with rates between 2% and 5% depending on the city and the service.

The tax reform (Constitutional Amendment 132/2023 and Complementary Law 214/2025) replaces this with a dual value added tax. The federal CBS replaces PIS and COFINS, and the IBS, shared by states and municipalities, replaces ICMS and ISS. A Selective Tax (Imposto Seletivo) applies to goods harmful to health or the environment.

• 2026, test year. CBS at 0.9% and IBS at 0.1% appear on invoices. The amounts can be offset against PIS and COFINS, and companies that meet the new reporting obligations can be released from paying them.
• 2027. CBS starts at its full rate and PIS and COFINS are extinguished. IPI drops to zero for most products, and the Selective Tax begins.
• 2029 to 2032. ICMS and ISS are reduced step by step while the IBS rises.
• 2033. The new system operates alone.

For a foreign-owned company, the practical impact starts now: invoicing systems, product codes and contracts must handle CBS and IBS fields. Our guide on the tax reform for foreign-owned companies covers the transition in detail.

Payroll taxes in short

Employment costs are a major line in any Brazilian budget. On top of salary, the employer pays social security contribution (INSS) of 20% of payroll, an occupational accident contribution (RAT) of 1% to 3%, adjusted by a risk factor, and contributions to third parties such as the Sistema S, typically about 5.8%. It also deposits 8% of salary each month into the employee’s severance fund (FGTS).

Beyond these charges, employees are entitled to a 13th salary and paid vacation with an extra one-third. As a result, total employer cost often exceeds the gross salary by a wide margin. A few sectors still benefit from the payroll relief regime, but Law 14,973/2024 phases it out gradually until 2028. Our page on hiring employees in Brazil explains the full cost of a hire.

Dividends, JCP and paying the foreign parent

For decades, Brazil did not tax dividends. That changed on 1 January 2026. Under Law 15,270/2025, dividends paid, credited or remitted to shareholders resident abroad bear withholding income tax at 10%, with no minimum threshold. The same 10% applies to shareholders in low-tax jurisdictions.

• Transition rule. Profits for periods up to 2025 remain exempt if their distribution was approved by 31 December 2025 and they are paid on the terms of that approval. The Receita Federal’s Q&A states that payment must occur by 2028.
• Exemptions. Foreign governments (with reciprocity), sovereign wealth funds and foreign pension entities, as defined in the law, are exempt.
• Credit mechanism. If the company’s effective profit tax plus the 10% exceeds the nominal 34% (or 40% and 45% for some financial companies), the foreign beneficiary may opt for a credit of the excess. The procedure depends on regulation.

Interest on net equity (JCP) is the other classic route. The company pays a return on equity, limited by the long-term interest rate (TJLP) and by profit, and deducts it from its IRPJ and CSLL base. Since 1 January 2026, the withholding rate on JCP is 17.5% (LC 224/2025), up from 15%. In addition, JCP may now be calculated only on profits from prior years. Whether JCP still beats a dividend depends on the parent’s home-country tax position and on the applicable treaty.

Other payments to the parent have their own rules. Royalties and technical services generally bear withholding income tax and CIDE, and imported services may also trigger ISS and import contributions. In every case, the remittance is made through a foreign exchange contract with a Brazilian bank, and the investment should be up to date in the Central Bank’s SCE-IED system.

Transfer pricing, treaties and the minimum tax

Transfer pricing

Since 1 January 2024, Brazil applies the arm’s length principle in line with the OECD guidelines (Law 14,596/2023), replacing its old fixed-margin rules. Transactions between the Brazilian company and related parties abroad must be priced as independent parties would price them. Taxpayers with controlled transactions of R$ 15 million or more in the prior year must also file a Master File and a Local File, with simplified documentation up to R$ 500 million.

Tax treaties

Brazil has more than 35 double tax treaties in force, including with Argentina, Chile, China, France, Japan, Mexico, the Netherlands, Portugal, Spain and Switzerland. There is no income tax treaty with the United States, and the treaty with Germany ended in 2006. Most treaties cap dividend withholding at 10% to 15%, so the new 10% domestic rate already sits at or below the treaty ceiling. Treaties matter more for interest, royalties, service fees and JCP.

Global minimum tax

Law 15,079/2024 created an additional CSLL to ensure a 15% minimum effective rate for groups with consolidated revenue of €750 million or more in at least two of the four previous years, in line with the OECD Pillar Two rules. It applies from 2025. If your group is in scope, the Brazilian subsidiary needs specific calculations and filings.

Filing obligations of a Brazilian company

Brazil runs its tax compliance through the Public Digital Bookkeeping System (SPED). In practice, the accountant files most returns, but management signs off on them and remains responsible. The main ones are below.

Beyond tax, the company must keep its corporate books, approve its accounts within four months after year end and file Central Bank declarations when thresholds apply. Late or missing returns trigger fines and can block the tax clearance certificates that banks and clients ask for.

Planning corporate tax in Brazil before you incorporate

Most tax mistakes of foreign-owned companies happen before the first sale. The checklist below avoids the common ones.

1. Model both regimes

   Run Lucro Presumido and Lucro Real against your budget for the first two years, including the 2026 surcharge above R$ 5 million and the CBS from 2027.

2. Define the activity codes carefully

   The activity codes (CNAE) registered at incorporation decide which taxes apply, which registrations you need and which presumption percentages are used.

3. Design intercompany flows

   Decide early how the parent will be paid: dividends, JCP, service fees or royalties. Each has a different tax cost and needs contracts and transfer pricing support.

4. Register the foreign capital

   Report the investment in SCE-IED, so that future dividends and capital returns flow without friction.

5. Hire an accountant before you invoice

   Brazil’s monthly obligations start in the first month of activity, even with no revenue.

Once the apostilled documents arrive in Brazil, our team typically has the company ready to operate within 15 to 30 days, unless the activity requires a specific license. That window is the right time to settle the tax regime with your accountant. For the full sequence, see how to open a company in Brazil.

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