Brazil

Geography and Population

Brazil is the world’s fifth-largest country by area.
As of early 2026, Brazil’s population is estimated at approximately 213.6 million, ranking it as the 7th most populous country in the world, behind India, China, the United States, Indonesia, Pakistan, and Nigeria

Political and Administrative Structure

Brazil is divided into 27 federal units (26 states plus the Federal District), with Brasília as the capital. The official language is Portuguese, and the currency is the real (BRL).

Economy

Brazil continues to be one of the world’s major economies. In 2026:

• By GDP (PPP), Brazil ranks 8th globally, with an estimated PPP GDP of around Int$ 5.16 trillion.
• By GDP (nominal), Brazil ranks just outside the global top 10, with about USD 2.29 trillion in 2026.

The economy is diversified, with significant output in agriculture, commodities, manufacturing, and services, and a large urban middle class (context unchanged).

Recent Economic Performance

Brazil experienced a strong post‑pandemic recovery through 2022–2024, with real GDP growth averaging 3.2% across those three years, surpassing International Monetary Fund (IMF) expectations. However, in 2025, the economy has slowed and GDP growth projections were revised to 3.5% for 2024 and 2.1% for 2025.

As of early 2026, the outlook remains muted, with elevated real interest rates and fiscal constraints weighing on activity.

Despite challenges, unemployment reached historic lows in 2024, and poverty declined compared to pre‑pandemic years.

Macroeconomic Reforms

Labour and Social Security Reforms

Brazil implemented a labour reform in 2017 and a pension/social security reform in 2019.

Major Tax Reform (PEC 45/2019 and subsequent laws)

Brazil’s long‑awaited tax reform advanced significantly between 2023 and 2025:

• In December 2023, Congress approved a historic overhaul of the consumption tax system, unifying five taxes (ICMS, ISS, IPI, PIS, COFINS) into a dual VAT model consisting of:

  • CBS (federal) and IBS (state/municipal), as well as
  • IS (Selective Tax).
    Implementation began in 2026, with full transition through 2033.

The reform aims to simplify Brazil’s notoriously complex tax system and harmonise rules across cities/States.

Key features include:

• A unified consumption tax base with non‑cumulative rules and standardized legislation;
• Transition rules allowing coexistence of old and new systems until 2032;
• More predictable credit refunds.

Income Tax Reform Efforts

A new Income Tax Legislation (Law nº 15.270/2025) proposes:

• Higher exemption thresholds for individuals,
• A Minimum Income Tax for high‑income earners,
• New rules for taxing foreign‑sourced dividends at a 10% withholding tax,
• Removal of some exemptions previously benefiting capital income.
  The legislation aims to increase progressivity and reduce distortions in income taxation.

Transfer Pricing Reform

As of January 1, 2024, Brazil officially adopted OECD‑aligned transfer pricing (TP) rules under Law 14,596/2023, marking a major shift from its former fixed-margin system to the arm’s-length principle.

• New rules apply mandatorily for FY 2024.
• Early adoption was permitted for 2023.
• The framework covers intangibles, intra‑group services, cost-sharing agreements, business restructurings, and cross-border financial transactions.

This change supports Brazil's ongoing OECD accession efforts.

PwC Brazil

PwC came to Brazil in 1915. We now have around 4,000 professionals in 15 offices located in almost every region of Brazil. PwC Brazil offers a network of experienced professionals with expertise in specific economic sectors of industry and accumulated knowledge of business to assist our clients grow and prosper.

PwC's awarded tax team provides tailored solutions for clients doing business in Brazil, who receive trusted advice about the complex local corporate tax environment.