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Latest changes: the Brazilian rule changes foreign investors need to know in 2026 and 2027

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Last verified: 2026-10-27 · Status: Changing

Brazil is changing fast. In 2026 it began testing the new dual VAT (CBS and IBS), started withholding 10 percent on dividends sent abroad, let foreign invested companies hold foreign currency accounts, capped tax penalties and made the data protection authority a full regulatory agency. In October 2026 a constitutional amendment cut the work week to 42 hours from December 2026 and 40 hours from December 2027, with two paid rest days and no pay cut. Each item below gives the norm, the effective date and the practical effect.

USD figures use the Banco Central do Brasil PTAX selling rate of R$5.3346 per US dollar for 27 October 2026, the rate published on the day this page was verified. Conversions are for orientation only; the rate on the day of each FX contract will differ.

Key facts

Withholding on dividends paid to non residents	10 %Lei nº 9.249 art. 10 § 4, wording of Lei nº 15.270, as of 2026-01-01 · in force
Monthly dividend threshold per company and resident individual above which 10 percent withholding applies	50000 BRLLei nº 9.250 art. 6-A, wording of Lei nº 15.270, as of 2026-01-01 · in force
CBS test rate in 2026	0.9 %ADCT art. 125, as of 2026-01-01 · in force
IBS test rate in 2026 (state)	0.1 %ADCT art. 125, as of 2026-01-01 · in force
IBS rate in 2027 and 2028 (state 0.05 plus municipal 0.05)	0.1 %ADCT art. 127, as of 2027-01-01 · pending
PIS and COFINS extinguished	2027-01-01 dateADCT art. 126 item II, as of 2027-01-01 · pending
ICMS and ISS extinguished	2033-01-01 dateADCT art. 129, as of 2033-01-01 · pending
Cap on tax penalties tied to the tax assessed	75 % of taxCTN art. 113-A § 1 I, wording of LC 236, as of 2026-09-04 · in force
Cap on tax penalties with fraud, evasion or collusion	100 % of taxCTN art. 113-A § 1 II, as of 2026-09-04 · in force
Cap on tax penalties for repeat offenders	150 % of taxCTN art. 113-A § 1 III, as of 2026-09-04 · in force
Maximum normal weekly hours from 16 December 2026	42 hoursEmenda Constitucional nº 141 art. 6 I, as of 2026-12-16 · pending
Maximum normal weekly hours from 16 December 2027	40 hoursEmenda Constitucional nº 141 art. 6 II, as of 2027-12-16 · pending
Paid weekly rest days from 16 December 2026	2 daysConstitution art. 7 XV, wording of Emenda Constitucional nº 141, as of 2026-12-16 · pending
Paternity leave from 1 January 2027	10 daysLei nº 15.371 art. 11 I, as of 2027-01-01 · pending
National minimum wage	1621.00 BRL per monthDecreto nº 12.797 art. 1, as of 2026-01-01 · in force
Foreign currency accounts allowed for companies with direct non resident shareholding	Yes, from 1 October 2026 textResolução BCB nº 277 art. 70 XIV, wording of Resolução BCB nº 575, as of 2026-10-01 · in force
e-BEF start for Ltdas. with prior year revenue above R$78,000,000	2027-01-01 dateIN RFB nº 2.290 Annex, stage 1, as of 2027-01-01 · pending
e-BEF start for Ltdas. with prior year revenue above R$4,800,000	2028-01-01 dateIN RFB nº 2.290 Annex, stage 2, as of 2028-01-01 · pending

The rule

1. The normal work week falls to 42 hours two months after publication of the amendment and to 40 hours one year after that, with a maximum of 8 hours a day; employees get two paid weekly rest days, one preferably on Sunday. The cut applies to existing contracts with no nominal or proportional pay cut, including salary floors. Collective clauses on hours and rest that conflict with the amendment lapse after two months. Graduates earning at least 2.5 times the social security benefit ceiling are outside hours control unless the employer or a collective agreement grants it.
Cost to do it: No filing fee; the cost is labor: the same monthly salary buys fewer hours, so hourly cost rises.
Example: An employee on R$6,000 a month for 44 hours a week keeps R$6,000 for 40 hours. The salary per contracted weekly hour rises from about R$136.36 to R$150.00, a 10 percent increase. / R$6,000 is about US$1,124.73; the per weekly hour figures are about US$25.56 and US$28.12.Emenda Constitucional nº 141 of 16 October 2026, published in the Diário Oficial da União on 16 October 2026, Art. 1 (new Constitution art. 7 items XIII and XV); arts. 2, 3, 6, 8 and 10, 2026-10-16 official text · verified 2026-10-27 · changed: Published 16 October 2026: 42 hour week and two paid weekly rest days from 16 December 2026; 40 hour week from 16 December 2027 (previously 44 hours and one rest day).

2. Profits and dividends paid, credited or remitted abroad are subject to 10 percent income tax withholding. Profits for years up to 2025 are exempt if their distribution was approved by 31 December 2025 and they are paid on the terms originally approved. Payments to foreign governments with reciprocity, sovereign funds and foreign pension entities are exempt. A non resident may claim a credit if the combined effective corporate rate plus the 10 percent exceeds the nominal IRPJ plus CSLL rates.
Cost to do it: 10 percent of the gross dividend, withheld by the paying company.
Example: A R$1,000,000 dividend from 2026 profits to a foreign parent: R$100,000 withheld, R$900,000 remitted. / About US$187,455 gross, US$18,746 withheld and US$168,710 net.Lei nº 15.270 of 26 November 2025, amending Lei nº 9.249 of 26 December 1995, Lei nº 9.249 art. 10 §§ 4 and 5 and art. 10-A; Lei nº 15.270 art. 8, 2025-11-26 official text · verified 2026-10-27 · changed: From 1 January 2026, dividends to non residents went from zero to 10 percent withholding (Lei nº 15.270 art. 8: effects from 1 January 2026).

3. Residents also changed: from January 2026, dividends above R$50,000 a month from one company to one resident individual are subject to 10 percent withholding on the whole amount, and monthly income up to R$5,000 has its income tax reduced to zero. From the 2027 return (calendar year 2026) a minimum tax applies to individuals with annual income above R$600,000.
Example: A local manager receiving R$60,000 of dividends in one month from one company suffers R$6,000 withholding; at R$50,000 there is none. / R$60,000 is about US$11,247 and R$6,000 about US$1,125; the R$50,000 threshold is about US$9,373.Lei nº 15.270 of 26 November 2025, amending Lei nº 9.250 of 26 December 1995, Lei nº 9.250 art. 3-A, art. 6-A and art. 16-A, 2025-11-26 official text · verified 2026-10-27 · changed: Effects from 1 January 2026 (Lei nº 15.270 art. 8).

4. Companies based in Brazil with direct non resident participation in their capital, exporters of goods, private resident companies owing foreign loans, and non resident parents or lenders may hold foreign currency deposit accounts in Brazil. Transfers in foreign currency to and from these accounts need no FX contract.
Cost to do it: No Central Bank fee is set; banks set account charges.Resolução BCB nº 575 of 18 June 2026, amending Resolução BCB nº 277 and nº 278 of 31 December 2022, Art. 1 (Res. 277 art. 70 items XII to XVI and sole paragraph; art. 75-A); art. 4, 2026-06-18 official text · verified 2026-10-27 · changed: In force from 1 October 2026 (art. 4), when these holders were added to the list of permitted foreign currency account holders in Resolução BCB nº 277 art. 70.

5. The dual VAT transition: in 2026 IBS is charged at a state rate of 0.1 percent and CBS at 0.9 percent, offset against PIS and COFINS (or refunded within 60 days); taxpayers who meet the reporting obligations may be exempted from paying, under complementary law. From 2027 CBS is charged in full, PIS and COFINS are extinguished and IPI falls to zero except for goods with Manaus Free Zone incentives; IBS runs at 0.05 percent state and 0.05 percent municipal in 2027 and 2028. ICMS and ISS rates step down to 9/10 in 2029, 8/10 in 2030, 7/10 in 2031 and 6/10 in 2032, and both taxes are extinguished from 2033.
Example: On a R$100,000 sale in 2026 the test amounts are R$900 of CBS and R$100 of IBS, credited against PIS and COFINS owed. / R$100,000 is about US$18,746; R$900 about US$168.71 and R$100 about US$18.75.Emenda Constitucional nº 132 of 20 December 2023 (Constitution, transitional provisions, ADCT), ADCT arts. 125, 126, 127, 128 and 129, 2023-12-20 official text · verified 2026-10-27 · changed: Test phase started 1 January 2026; next milestone 1 January 2027 (CBS full, PIS and COFINS extinct).

6. Tax penalties tied to the tax assessed may not exceed 75 percent of the tax, 100 percent where fraud, evasion or collusion is proven, and 150 percent for repeat offenders. Penalties must be reasonable and proportionate to the infringement. Stand alone fines not tied to a tax amount are outside the cap.
Example: On R$1,000,000 of underpaid tax, the penalty ceiling is R$750,000, R$1,000,000 with fraud and R$1,500,000 for a repeat offender. / About US$140,592, US$187,455 and US$281,183 on US$187,455 of tax.Lei Complementar nº 236 of 4 September 2026, amending the National Tax Code (Lei nº 5.172), CTN art. 113-A, caput and § 1 items I to III, 2026-09-04 official text · verified 2026-10-27 · changed: In force on publication in September 2026 (LC 236 final article): national caps on tax penalties added to the CTN.

7. The data protection authority became the Agência Nacional de Proteção de Dados (ANPD), a special regime autarchy with functional, technical, decision making, administrative and financial autonomy, and was added to the statutory list of federal regulatory agencies.Lei nº 15.352 of 25 February 2026 (conversion of Medida Provisória nº 1.317 of 2025), Art. 1 (Lei nº 13.709 art. 55-A); Lei nº 13.848 art. 2 item XII, 2026-02-25 official text · verified 2026-10-27 · changed: 25 February 2026: ANPD status as a regulatory agency confirmed in law.

8. Beneficial owner reporting (e-BEF) is phased in for limited companies: from 1 January 2027 for simple or limited companies with prior year revenue above R$78,000,000, and from 1 January 2028 for those above R$4,800,000. Foreign entities that invest in financial and capital markets also file from 2027. Entities not on the phased list, including foreign parents holding a CNPJ, file from the instruction's entry into force.
Example: A Ltda. with two partners and 2026 revenue of R$90,000,000 files e-BEF from 1 January 2027; one with R$10,000,000 files from 1 January 2028. / R$78,000,000 is about US$14,621,527 and R$4,800,000 about US$899,786.Instrução Normativa RFB nº 2.290 of 30 October 2025, amending Instrução Normativa RFB nº 2.119, Art. 55-A; Annex (stages 1 and 2), 2025-10-30 official text · verified 2026-10-27 · changed: New phase in dates: 1 January 2027 and 1 January 2028.

9. Paternity leave lengthens to 10 days from 1 January 2027, 15 days from 1 January 2028 and 20 days from 1 January 2029; the last step only takes effect if the fiscal target of the prior budget guidelines law is met. The law enters into force on 1 January 2027.Lei nº 15.371 of 31 March 2026, Art. 11 items I to III and §§ 1 and 2; art. 14, 2026-03-31 official text · verified 2026-10-27 · changed: From 1 January 2027; until then the constitutional default of five days applies (ADCT art. 10 § 1).

10. The national minimum wage rose to R$1,621.00 a month from 1 January 2026.
Cost to do it: R$1,621.00 a month, about US$303.87.Decreto nº 12.797 of 23 December 2025, Art. 1, 2025-12-23 official text · verified 2026-10-27 · changed: 1 January 2026.

11. The monthly DCTFWeb federal tax and contribution return is due by the last business day of the month after the taxable events.Instrução Normativa RFB nº 2.248 of 5 February 2025, amending Instrução Normativa RFB nº 2.237 of 4 December 2024, IN RFB nº 2.237 art. 6, 2025-02-05 official text · verified 2026-10-27 · changed: In force on publication on 7 February 2025; under the original DCTFWeb rule (Instrução Normativa RFB nº 2.005 of 29 January 2021, art. 10) the deadline was the 15th of the following month.

12. A new federal court fee table was enacted; the provisions changing the fee tables (arts. 3 and 5) take effect on 1 January of the year after publication, at least 90 days after publication, that is from 1 January 2027.Lei nº 15.498 of 4 September 2026, amending Lei nº 9.289 of 4 July 1996 and Lei nº 11.636 of 28 December 2007, Art. 6 item I, 2026-09-04 official text · verified 2026-10-27 · changed: New fee tables from 1 January 2027.

Area	Change	Norm	Effective	Status
Tax	10 percent withholding on dividends abroad	Lei nº 15.270	1 Jan 2026	In force
Tax	CBS 0.9 percent and IBS 0.1 percent test rates	EC 132, ADCT art. 125	1 Jan 2026	In force
Labor	Minimum wage R$1,621.00	Decreto nº 12.797	1 Jan 2026	In force
Data	ANPD becomes a regulatory agency	Lei nº 15.352	25 Feb 2026	In force
Tax	Penalty caps 75, 100 and 150 percent	LC 236	September 2026 (publication)	In force
FX	Foreign currency accounts for foreign owned companies	Resolução BCB nº 575	1 Oct 2026	In force
Labor	42 hour week and two rest days	EC 141	16 Dec 2026	Enacted, pending effect
Tax	CBS in full; PIS and COFINS extinct; IPI zero outside ZFM	EC 132, ADCT art. 126	1 Jan 2027	Enacted, pending effect
Labor	Paternity leave 10 days (15 in 2028, 20 in 2029)	Lei nº 15.371	1 Jan 2027	Enacted, pending effect
Compliance	e-BEF for Ltdas. above R$78,000,000 revenue	IN RFB nº 2.290	1 Jan 2027	Enacted, pending effect
Disputes	New federal court fee tables	Lei nº 15.498	1 Jan 2027	Enacted, pending effect
Labor	40 hour week	EC 141	16 Dec 2027	Enacted, pending effect
Tax	ICMS and ISS step down from 9/10 to 6/10	EC 132, ADCT art. 128	2029 to 2032	Enacted, pending effect
Tax	ICMS and ISS extinguished	EC 132, ADCT art. 129	1 Jan 2033	Enacted, pending effect

Reform tracker: effective dates verified against the official texts on 27 October 2026.

Worked example

US$100 dividend out of Brazil in 2026: at R$5.3346, US$100 is R$533.46. Withholding at 10 percent is R$53.35, so the parent receives R$480.11, about US$90.00, before any foreign tax credit at home (Lei nº 9.249 art. 10 § 4). Profits for 2025 or earlier approved by 31 December 2025 and paid on the approved terms still go out free of withholding (art. 10 § 5 I).
Hours budget: a plant with 100 employees on 44 hours a week has 4,400 contracted hours a week. At 42 hours from 16 December 2026 it has 4,200, and at 40 hours from 16 December 2027 it has 4,000, with no pay cut allowed (EC 141 arts. 2 and 6). Covering the gap of 400 hours a week means new hires or overtime.

Step by step

1. Payroll: model the 42 hour week for 16 December 2026 and the 40 hour week for 16 December 2027, and review collective agreements, because conflicting hours clauses lapse two months after publication (EC 141 art. 3).
2. Dividends: check which pre 2026 profits were approved for distribution by 31 December 2025 and pay them on the approved terms to keep the exemption (Lei nº 9.249 art. 10 § 5 I).
3. VAT: make sure 2026 invoices carry CBS and IBS test fields and that the ERP is ready for full CBS on 1 January 2027.
4. Treasury: consider a foreign currency account for the Brazilian subsidiary under Resolução BCB nº 575 if you receive foreign currency or owe foreign loans.
5. Compliance calendar: diarize e-BEF dates and the DCTFWeb deadline (see compliance calendar).

Common traps

Assuming old profits stay tax free automatically. Only results up to 2025 whose distribution was approved by 31 December 2025 and paid as approved are exempt (Lei nº 9.249 art. 10 § 5 I).
Cutting pay pro rata with the shorter week. EC 141 art. 2 bars any nominal or proportional pay reduction, including for salary floors.
Reading the IBS and CBS test rates as extra cost. In 2026 the amounts are offset against PIS and COFINS or refunded (ADCT art. 125 §§ 1 and 2).
Applying the penalty cap to every fine. Stand alone fines not linked to a tax amount are outside the CTN art. 113-A § 1 cap.

Sources

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