BPC Partners Newsletter - December 2025

Brazil Tax Updates: Incentive Cuts, Invoice Reform & Gambling Regulation

FOR INTERNATIONAL COMPANIES DOING BUSINESS IN BRAZIL

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Brazil Tax Updates January 2026

(NEWSLETTER BPC PARTNERS - JANUARY 2026)

CONGRESS APPROVES REDUCTION OF TAX INCENTIVES AND HIGHER TAXATION

TAX REFORM: THE NEW INVOICE (NOTA FISCAL) GETS READY

TAXES ON INTERNATIONAL REIMBURSEMENT: POSITIVE CHANGE

BRAZIL DOES NOT GIVE UP TAX INCREASE ON GAMBLING SECTOR

COMPLIANCE FOR BETTING INDUSTRY: COMPROVABET HAS ARRIVED

BPC PARTNERS: A GREAT PLACE TO WORK

ANOTHER LAST MINUTE SURPRISE: CONGRESS APPROVES REDUCTION OF TAX INCENTIVES AND HIGHER TAXATION ON STRATEGIC SECTORS

On 17 December 2025, the Congresso Nacional approved Complementary Bill No. 128/2025 (PLP 128/25), introducing relevant changes to Brazil's federal tax framework as part of a broader fiscal rebalancing effort.

Key Changes Introduced

Reduction of federal tax incentives: The bill provides for a linear 10% reduction in federal tax and financial-tax incentives, including exemptions, reductions and special regimes related to PIS, COFINS, IRPJ, CSLL, IPI, Import Tax (II) and employer social security contributions (INSS). Existing incentives are not eliminated but their economic value will be reduced.
Increased taxation of Interest on Net Equity (JCP): PLP 128/25 also increases the taxation of Juros sobre Capital Próprio (JCP), weakening one of the main profit-remuneration mechanisms used by Brazilian companies, particularly by subsidiaries of multinational groups. This change is expected to reduce the tax efficiency of JCP compared to dividends.
Higher tax burden on fintechs: The bill raises the tax burden on fintech companies, aligning their taxation more closely with the traditional financial sector and reducing the differentiated treatment that has applied to certain fintech business models.
Increased taxation of fixed-odds betting: The proposal increases taxation on fixed-odds betting operators, reinforcing the government's strategy of combining market regulation with revenue generation in the newly regulated betting sector.

10%

Reduction in Tax Incentives

Jan 1, 2026

IRPJ & Import Tax Start

Apr 1, 2026

PIS, COFINS, CSLL Start

Implementation Timeline: If sanctioned, the measures will apply from 1 January 2026 for IRPJ, Import Tax (II) and employer INSS contributions; and from 1 April 2026 for PIS, COFINS, CSLL, IPI and other INSS components, in accordance with the constitutional 90-day prior notice rule (anterioridade nonagesimal).

TAX REFORM / THE NEW INVOICE (NOTA FISCAL) GETS READY

Technical Note 2025.001 – version 1.11 introduces important updates to the validation rules of the Electronic Electricity Invoice (NF3e), as part of Brazil's ongoing implementation of the IBS and CBS under the Consumption Tax Reform. The revisions correct issues identified in earlier versions and further align the NF3e layout with the upcoming phases of assisted tax assessment.

Three Key Changes

CBS zero rate in incentivized areas: The new version allows the CBS zero rate to be applied in incentivized areas. Previous system validations improperly rejected invoices reporting a zero CBS rate. As of version 1.11, a zero rate is permitted when both issuer and recipient are located in the same incentivized area, such as the Manaus Free Trade Zone (ZFM) or Free Trade Areas (ALCs), bringing validation rules into line with the applicable tax incentives.
Rate Reduction Group (gRed) revision: The rules for the Rate Reduction Group (gRed) were revised. The group may now only be reported when the applicable tax rate is greater than zero, eliminating inconsistencies and standardizing invoice completion.
Negative tax results reinforcement: The rules preventing negative tax results were reinforced. Deferral and refund amounts may not exceed the tax due, ensuring that the final IBS or CBS calculation cannot result in a negative balance.

Overall, these adjustments improve system stability, reduce improper invoice rejections, and support a smoother transition to the assisted assessment model under Brazil's new consumption tax framework.

Important Update: The tax authorities announced on December 1, 2025, that completion of the IBS/CBS fields will not be required by validation rules in January 2026, as previously planned. The decision provides relief to companies that were rushing to adjust their systems at the end of the year. As a result, businesses are granted additional time to adapt, with a reduced risk of invoice rejections during the initial phase of implementation.

TAXES ON INTERNATIONAL REIMBURSEMENT: SOME POSITIVE CHANGE

The CARF (Brazil's federal administrative tax appeals court) annulled a BRL 5.1 million tax assessment against Arcos Dourados related to the collection of CIDE on amounts remitted abroad under a cost-sharing agreement.

BRL 5.1M

Tax Assessment Annulled

Unanimous

CARF Decision

No CIDE

On Cost-Sharing

In a unanimous decision, the 1st Panel of the 4th Chamber of the 3rd Section held that cost sharing between companies of the same group does not constitute a service provision or a transfer of technology, therefore excluding the levy of CIDE.

In this case, the Brazilian entity remitted amounts to affiliated companies in the United States, Uruguay, and the Netherlands to cover administrative and management expenses. The tax authorities classified these remittances as technical services subject to CIDE. CARF, however, recognized that the payments represented mere reimbursement of expenses, with no revenue, turnover, or profit generation.

Key Legal Reasoning

As a result, the Council concluded that there was no taxable event under Law No. 10,168/2000. The decision aligns with a line of CARF case law generally favorable to taxpayers in cost-sharing arrangements, although the matter is not yet fully settled.

The core reasoning rests on the absence of profit or remuneration in the remittances, further reinforced by recent transfer pricing rules that classify such services as low value-adding. Current legislation now requires a minimum margin for taxation purposes — a requirement that did not exist in prior years — strengthening the argument that there was no legal basis for CIDE taxation in the past.

CARF reaffirmed that, in the absence of profit, revenue, or technology transfer, CIDE should not apply to cost-sharing reimbursements.

BRAZIL DOES NOT GIVE UP TAX INCREASE ON GAMBLING SECTOR

The Brazilian regulatory landscape for gambling is evolving. The Senate plenary recently approved PLP 128/2025, a bill that proposes a gradual rise in gambling taxation, alongside a reduction of federal tax benefits by 10% for several sectors.

13%

GGR Tax in 2026

14%

GGR Tax in 2027

15%

GGR Tax in 2028

Under the proposal, the current 12% tax on Gross Gaming Revenue (GGR) for licensed betting operators would increase to 13% in 2026, 14% in 2027, and 15% in 2028. Half of the additional revenue is expected to support social security, with the remaining half directed to healthcare initiatives.

Joint Liability Warning: The legislation also introduces joint liability for those advertising illegal betting platforms or supporting unauthorized operators, tightening compliance obligations across the ecosystem.

Following Senate approval, the bill now heads to President Luiz Inácio Lula da Silva for sanction. If promulgated, most measures would take effect from early 2026 after the constitutionally required 90-day waiting period.

This development reflects a broader trend of fiscal recalibration in Brazil's gaming sector, balancing revenue goals with responsible regulation — and will be closely watched by operators, investors and bettors alike.

COMPLIANCE FOR THE BETTING INDUSTRY: COMPROVABET HAS ARRIVED

ComprovaBet is a new regulatory mechanism introduced under Brazil's fixed-odds betting framework to strengthen transparency and tax compliance.

The instrument was formally established by regulation issued by the Secretariat of Prizes and Betting of the Ministry of Finance (SPA/MF), published in the Diário Oficial da União (DOU) in 2024, as part of the implementation of the new fixed-odds betting regime. Despite being established in 2024, it turns live only in 2026.

What is ComprovaBet?

ComprovaBet is a Proof of Results that must be issued annually by licensed betting operators. It consolidates a bettor's activity for the relevant tax year, including total wagers placed, total winnings, and the resulting net outcome.

Feb 2026

Operator Issuance Deadline

Apr 2026

Bettor Tax Payment Deadline

Annual

Reporting Frequency

For the first reporting cycle, operators are required to issue ComprovaBet by the last business day of February 2026, as set out in the regulation.

Based on this document, bettors can verify whether they are required to use the official tax application, calculate any taxes due, and settle their tax obligations by the last business day of April 2026, in accordance with the applicable tax rules.

ComprovaBet effectively functions as an annual betting statement, aligning operator data with tax reporting requirements and supporting fiscal oversight, traceability, and compliance.

BPC PARTNERS: A GREAT PLACE TO WORK

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It confirms BPC's commitment to building a work environment grounded in respect, collaboration, and professional growth.

Our Culture

At BPC, people are at the core of our culture — from continuous training and knowledge sharing to autonomy and accountability.

The certification also reinforces our long-term vision: delivering high-quality services to our clients through motivated and engaged teams.

Obtaining the Great Place to Work® seal is both a milestone and a responsibility. It motivates us to keep improving our internal practices and to remain a firm where talent thrives. We thank our entire team for making BPC a truly great place to work.

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