BRAZIL Trends and Developments Contributed by: João André Buttini de Moraes, Sergio Villanova Vasconcelos, Amanda Nadal Gazzaniga and Guilherme Villas Bôas, ButtiniMoraes Advogados
companies should define strategies for mitigation, supply adjustment, portfolio diversification and invest - ment in clean technologies. Keeping track of decrees, executive orders and pos - sible classification criteria will be essential, especially in highly regulated or dynamic innovative markets. In summary, PIS/COFINS and IS mark paradigm shifts – a new cycle of compliance, planning and tax litiga - tion. New laws: contingencies, rights and opportunities for challenge In the wake of reform, the legislative environment is becoming increasingly dynamic, and sometimes unpredictable. The publication of regulations creating new standards for existing regimes requires immedi - ate action and deep knowledge of legislative hierar - chy. Supplementary Law No 224/2025 is a good example of this rapid change. In force since December 2025, it restructured significant issues: • by defining presumed profit as a “tax benefit” and requiring a 10% increase in the presumed rates, the law sparked national debate due to the histori - cal neutrality of presumed profit – never previously treated as a fiscal incentive, but rather as an alter - native with less bureaucracy; • introduction of a temporal cutoff for fiscal benefits – only those granted by 31 December 2025 remain exempt from the increase, potentially harming companies with sectoral or regional incentives beyond that date; and • the ban on crediting exempt or zero-rate acquisi - tions, even under increased taxation, challenges the constitutional principle of non-cumulativity. Thus, consultants, attorneys and financial managers must map: • the practical effects of these new laws on con - tracts, operating margins and indirect taxation; • potential violations of acquired rights, legality, tax anteriority and legal certainty; and
• strategies for administrative or judicial challenge, risk analysis and accounting provisioning for adverse scenarios. Therefore, preventive actions increase the chance of preserving rights and building robust legal arguments for future litigation. Major tax judgements in superior courts: modulation and corporate leadership Brazil’s judicial environment will remain central for high-impact tax decisions in 2026. The Supreme Federal Court ( Supremo Tribunal Federal – STF) and Superior Court of Justice ( Superior Tribunal de Justiça – STJ) continue to judge tax matters that directly influ - ence company compliance and fiscal management models. In 2026, court decisions are expected to close long- standing debates, such as the exclusion of ISS from the PIS/COFINS calculation basis, with potential para - digm shifts for assessment and credit recovery. Moreover, discussions are expected about new tax laws such as the recent Supplementary Law No 224, which the National Confederation of Industry ( Con- federação Nacional da Indústria – CNI) is challenging before the Supreme Court (ADI 7920). Modulation of effects has become a frequent tool, limiting retroactive impacts and protecting compa - nies that have undertaken legal action before judg - ment (early judicial action is a competitive advantage). Companies must keep tax and legal teams well informed about court schedules, review fiscal posi - tions, adjust provisions and consider proactive litiga - tion strategies to protect credits and rights for the five years preceding any legal action. Integrating compliance, tax litigation, legislative moni - toring and financial analysis is essential for managing change, mitigating risks and strengthening legal cer - tainty. Companies with a multidisciplinary approach and focus on tax governance consolidate competitive advantage in a rapidly evolving judicial and regulatory environment.
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