On 14 April 2025, the Brazilian government officially enacted bill No. 2.088/23 as Law No. 15.122/25, empowering the government to implement countermeasures against countries imposing retaliatory measures on Brazilian products. The enactment followed the Brazilian President's ratification, with no vetoes to the bill. This law enables the adjustment of the Contribution on the Intervention in the Economic Domain (CIDE) and the Contribution for the Development of the National Cinema Industry (CONDECINE) rates applicable to payments to specific countries.

Earlier this month (April), both the Brazilian Senate and Chamber of Deputies approved the bill in response to recent tariff measures by the United States Administration. (For details, see EY Global Tax Alerts: US imposes President's Reciprocal Tariff Policy against trading partners and ends duty-free treatment for low-value shipments from China, dated 3 April 2025; and US suspends President Trump's Reciprocal Tariff Policy for 90 days, except for China, dated 11 April 2025.)

The new Brazil law sets forth a framework for adopting economic and environmental retaliatory measures aimed at safeguarding the competitiveness of Brazil's domestic production and upholding commercial agreements. For further details on the legislative background and implications, see EY Global Tax Alerts: Brazilian Senate approves bill of law allowing for retaliatory taxation, dated 2 April 2025; and Brazil close to enacting bill of law allowing for retaliatory taxation, dated 3 April 2025.

Implications

Multinational groups operating in Brazil should remain vigilant regarding the potential implementation of retaliatory measures, as these could significantly impact costs associated with royalty and technical service payments abroad. The government's ability to modify tax rates under this new law may necessitate a reassessment of existing agreements and pricing strategies.