The enactment of Complementary Law Nº. 224/2025 represents one of the greatest tax challenges for Brazilian companies in recent times.
The new legislation, by promoting a linear and immediately applicable reduction in tax benefits related to PIS and COFINS, creates a scenario of profound legal and financial uncertainty. Although there is no explicit increase in tax rates, the practical effect of the rule is an undeniable increase in the tax burden, directly impacting the financial health of organizations and the predictability of their operations.
This abrupt change in the rules of the game requires a careful analysis of its consequences and of the flaws that render it legally questionable.
Below, we highlight 5 key points of attention regarding the risks and effects of LC 224/2025:
1. Indirect Tax Increase and Violation of the Ninety-Day Rule: The first and most evident risk is the increase in the tax burden in a concealed manner. The reduction of a tax benefit, such as the right to credits, results in an increase in the final amount of tax to be paid. This is an indirect increase, and the Federal Constitution, in Article 195, § 6, clearly states that any law that increases a social contribution can only take effect after 90 days from its publication (principle of nonagesimal anteriority). The Federal Supreme Court has already consolidated, under General Repercussion (Theme 504), that this rule applies to indirect increases. Therefore, the immediate application of LC 224/2025 is unconstitutional, and the increased tax collection during this period is unlawful.
2. Violation of the Constitutional Principle of Non‑Cumulativity: The non‑cumulative system is a pillar of PIS and COFINS, designed to prevent cascading taxation throughout the production chain. It ensures companies have the right to credit themselves for taxes levied on the acquisition of inputs. By imposing a linear and indiscriminate cut on these credits, LC 224/2025 directly interferes with the core of this system. The rule creates an unconstitutional cumulative residue, as it prevents the taxpayer from fully recovering the tax paid in the previous stage, forcing them to bear a cost that should have been neutralized and distorting the tax’s very logic.
3. Disruption of Legal Certainty and Legitimate Expectation: Companies base their strategic planning, investments, and budgets on the tax rules in force. The abrupt change introduced by LC 224/2025 frustrates the taxpayer’s legitimate expectation, who relied on the stability of the system to make decisions. This loss of predictability represents a serious violation of the principles of legal certainty and the protection of trust, both pillars of the Rule of Law. The State cannot simply change the rules of the game overnight in a way that harms those who shaped their conduct according to the previously established norms.
4. Concrete Threat to Special Tax Regimes: Many sectors of the economy operate under special tax regimes, created by specific laws to encourage development, innovation, or competitiveness in strategic areas. LC 224/2025, being a general rule, cannot indiscriminately and tacitly revoke these regimes, under penalty of violating the legal principle that special law prevails over general law. The risk here is that the linear application of the new law may completely destabilize sectors that depend on these incentives to operate, generating a cascading effect of losses.
5. Immediate Impact on Cash Flow and Competitiveness: The most tangible and immediate effect of LC 224/2025 is financial. In this regard, the obligation to pay higher PIS and COFINS amounts overnight imposes an undue expenditure that directly affects companies’ cash flow. This sudden cost increase reduces investment capacity, erodes working capital, and impacts business competitiveness in relation to competitors. The damage is not merely potential; it is imminent and difficult to remedy, constituting a concrete risk to the sustainability of business operations.
LC 224/2025 goes beyond a simple change in tax rules, positioning itself as a source of instability and risk for the business environment. The evident unconstitutionalities, ranging from the violation of the ninety‑day rule to the disruption of non‑cumulativity and legal certainty, create a scenario conducive to strong judicial challenge. Faced with the concrete and imminent threat of an undue increase in the tax burden, it is essential that companies proactively assess the applicable measures to protect their rights and mitigate adverse financial impacts.
