On 2 April 2025, the Brazilian Chamber of Deputies approved bill of law No 2088/23 (the Bill or proposed legislation), concerning tariff and environmental reciprocity.

The Bill had been approved by Senate on 1 April 2025, in anticipation of new tariffs to be announced by the new United States Administration. The proposed legislation would allow the Brazilian government to adopt economic and environmental retaliatory measures if actions by other countries negatively impact the competitiveness of domestic production or violate commercial agreements. (For background, see EY Global Tax Alert, Brazilian Senate approves bill of law allowing for retaliatory taxation, dated 2 April 2025.)

From a tax standpoint, the Bill would allow the executive branch to adopt differential Contribution on the Intervention in the Economic Domain (CIDE) and Contribution for the Development of the National Cinema Industry (CONDECINE) rates to a specific country or economic block. The CIDE and CONDECINE are federal taxes imposed on payments for the transfer of technology (for example, royalties and technical services) or the distribution and exhibition of audiovisual works in Brazil, respectively.

Implications

It is still uncertain whether the Brazilian government will adopt any of the retaliatory measures allowed by the proposed legislation in response to the 10% tariff announced by the United States Administration. Nevertheless, multinational groups with operations in Brazil should continue to monitor the progress of the Bill. In particular, this could increase the cost of cross-border remittances from Brazil to the United States in relation to royalties or technical services, which are already subject to a high tax burden

The Bill will now be forwarded to the President for analysis. The President has 15 business days to approve or veto the Bill.