Complementary Law No. 224/2025: changes to tax incentives

On December 26, 2025, the Federal Government enacted Complementary Law No. 224/2025, bringing changes to the Brazilian tax landscape with alterations to tax incentives and rates, among other matters.

1. Reduction of tax incentives and benefits

Starting in 2026, several federal tax incentives will be reduced by 10%, affecting companies that currently benefit from tax exemptions or reductions. The change impacts sectors that, until now, enjoyed these benefits, such as companies included in the Special Incentive Regime for Infrastructure Development (Reidi), and those operating in the Sudam (Superintendency for the Development of the Amazon) and Sudene (Superintendency for the Development of the Northeast) areas, and may even impact the taxation of financial income and non-profit entities in some cases.

The law, however, provides for some exceptions to the reduction of incentives, such as:

2. Presumed Profit

Another important point is the increase in the tax burden on companies classified as Presumed Profit. The presumption margin applied to this regime will increase by 10%, restricted to the portion of gross revenue exceeding BRL 5 million in the calendar year.

3. Increase in the Withholding Income Tax Rate on Interest on Equity (JCP)

The Withholding Income Tax (IRRF) rate levied on Interest on Equity Capital (JCP) will increase from 15% to 17.5%. This change affects companies that use this form of capital remuneration, increasing the tax burden on income distributed to partners and shareholders.

4. Increase in CSLL rates for specific sectors

There was also an increase in the Social Contribution on Net Income (CSLL) rates for certain financial sectors and insurance companies.

5. Limitation of tax incentives to GDP

Another change relates to the limitation of tax incentives. Now, the total tax benefits granted cannot exceed 2% of Brazil's GDP (Gross Domestic Produt).

Taking effect

Complementary Law No. 224/2025 has different dates for the effects to take effect, depending on whether the taxes are subject to the principles of annuality and "noventena".

• From January 2026: IRPJ (Corporate Income Tax), II (Import Duty)
• From April 2026: IPI (Tax on Industrialized Products), CSLL (Social Contribution on Net Profit), PIS, Cofins, Social Security Contribution

Tax consulting

Domingues e Pinho Contadores provides assistance to companies in adapting to tax changes. Trust the guidance of our specialized team: dpc@dpc.com.br.