The Complementary Bill (PLP) 128/25, recently approved by the Chamber of Deputies and the Senate, changes the logic governing tax expenditures, which is expected to result in an increase in the tax burden for companies in Brazil that currently rely on incentives.
The new system reduces the cases of permanent exceptions and expands State control over tax benefits, with provisions for periodic evaluations and real possibilities of reduction or elimination.
Below, we highlight 5 key points of attention for companies benefiting from tax incentives.
1. Across-the-board 10% cut in federal tax benefits: The Complementary Bill (PLP) establishes an across‑the‑board cut of at least 10% on all federal tax incentives, directly affecting companies that rely on exemptions, reduced tax bases, or presumed credits. In practice, the measure limits the enjoyment of incentives to 90% of their original value, meaning that presumed credits and tax reductions are limited to this threshold, while tax regimes based on presumed profit margins will have their presumption percentages increased by 10%. The implementation will be gradual, with a reduction of at least 5% in each of the first two years of the law’s effectiveness.
2. Taxes affected by the reduction: The reduction will affect federal tax benefits, impacting taxes such as Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL) in cases of exemption or reduced tax base; PIS/Cofins in special regimes or with reduced rates; and IPI in production chains under special regimes. The measure also affects the cost structure of the Presumed Profit Regime, whose margins may be recalculated. In general, the 10% reduction rule applies to all federal tax benefits that grant exemption, reduction of tax base, or tax credits.
3. Stricter rules for granting or extending benefits: The Complementary Bill (PLP) establishes more rigorous technical criteria for granting, extending, and maintaining tax incentives, based on planning, monitoring, evaluation, and transparency guidelines. The approval or renewal of a tax incentive becomes conditioned on demonstrating its budgetary and financial impact, establishing a validity period, and setting performance targets. Failure to comply with these requirements may result in the reduction or termination of the benefit, increasing legal uncertainty and the need for more robust tax compliance.
4. Tax planning based on incentives may lose efficiency: Corporate structures and tax regimes selected due to tax incentives may cease to be the most advantageous option, rendering the tax planning inefficient. A company opting for the Presumed Profit Regime, for example, which combined incentives with a favorable presumption margin, may lose its advantage under the regime, requiring migration to the Actual Profit Regime or a corporate reorganization.
5. Increased requirement for documentation and fiscal transparency: Enjoyment of tax incentives will now demand a higher level of documentary evidence, strict adherence to regulatory criteria, and greater transparency before tax administration, increasing the risk of challenges. In this context, organizations lacking strong internal controls and compliance systems are exposed to a higher risk of tax assessments based on failure to comply with conditions that, although previously established, were subject to less stringent oversight.
Complementary Bill 128/25 represents a milestone in the transition to a new fiscal paradigm, anticipating the logic of greater neutrality and fewer sectoral incentives seen in the Tax Reform. The State now treats tax incentives as temporary and conditional tools, requiring companies to undertake strategic reassessments. Tax benefits, once perceived as guarantees, must now be treated as risks to be managed. The competitiveness of organizations will depend on their ability to adapt to a more rigorous fiscal environment, where the absence of strong compliance practices may jeopardize the very sustainability of the business.
