Fiscal Transparency under Pilar Two

the Case of Investment Funds in Brazil

Abstract

Aligning itself with the global minimum taxation rules outlined within the OECD and G20, Brazil has introduced, through Law No. 15,079/2024 and Normative Instruction No. 2,228/2024, a Qualified Domestic Minimum Top-up Tax (QDMTT) in the form of an additional Social Contribution on Net Profit (CSLL). The complexity of these rules is heightened by the near-literal importation of foreign concepts into a distinct domestic reality, among which the notion of tax transparency stands out, a concept that has been historically underdeveloped in Brazilian tax law. This article seeks to examine the notion of tax transparency within the scope of Pillar 2 and its transposition into the Brazilian system, using investment funds established in Brazil as the main object of analysis. For this purpose, the study is divided into four parts. Initially, it presents the concept of tax transparency under Pillar 2 and its two main tests for qualifying entities of a multinational group. Next, it examines special structures involving multiple Tax Transparent Entities and tax havens, focusing on their specific effects in light of the GloBE rules. In the third part, these concepts are applied to Brazilian investment funds, considering, among other aspects, the notion of Investment Entities, the “come-cotas” regime and different investor profiles. Finally, the article offers some conclusions regarding the incompatibility and challenges of applying the Pillar 2 concept of tax transparency to investment funds in Brazil.