By Luis Eduardo Queiroz – Director of International Tax Consulting
Worldwide Taxation (TBU) is one of the pillars of the Brazilian international tax regime. It refers to the rule under which legal entities domiciled in Brazil must be taxed not only on profits earned within the national territory, but also on those obtained by their controlled and affiliated entities abroad.
In the Brazilian context, the calculation of TBU gained clearer contours with Law No. 12,973/2014, which established criteria for including, in taxable income (lucro real), the results generated by related foreign entities. The Brazilian model seeks to anticipate the taxation of foreign profits through the creation of a deemed profit distribution on December 31 of each year.
The relevance of TBU goes beyond mere legal compliance. Its proper application directly impacts companies’ tax planning, influencing strategic decisions such as investment location, global corporate structure, and profit distribution policies. Furthermore, the regime requires a high level of control and transparency over international operations, including the proper determination of foreign profits and the management of tax credits.
In this context, operational complexity is significant. The identification of entities subject to the rule, the consolidation of results, the analysis of foreign tax regimes, and the proper reporting of information in the Tax Accounting Bookkeeping (ECF) are steps that require specialized technical expertise.
MCS Markup supports companies in understanding and applying Brazilian TBU rules, ensuring compliance and tax efficiency. Our services include mapping foreign subsidiaries, running tax impact simulations with and without consolidation, calculating additions to taxable income, and developing strategies to reduce the overall tax burden, including the utilization of foreign tax credits, deemed credits, and other opportunities provided under Brazilian rules, when applicable, to achieve maximum tax efficiency for Brazilian taxpayers.
Additionally, we assist in the preparation of ECF filings, with a focus on sections related to foreign profits (X340–X357), CBCr (W100–W300), and Lalur (Parts A and B). We also support the restructuring of international operations, aiming at greater efficiency and risk mitigation.
In an increasingly regulated global environment, TBU calculations are no longer merely a tax obligation but have become a strategic element for companies operating across borders, especially when competing with businesses that benefit from lower tax burdens abroad.
