2025 Tax Reform Exposes Hidden Flaws and Puts Brazil on a Path to Legal Conflicts with Controversial “Sin Tax”

Written by Caio Aviz

Published on 08/11/2025 at 11:00

Imagem ilustrativa mostrando um martelo jurídico, documentos fiscais e a bandeira do Brasil, elementos que remetem às críticas da OAB sobre insegurança jurídica e o imposto do pecado.

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OAB Criticism About Risks and Distortions

The tax attorney of the Federal Council of the OAB, Luiz Gustavo Bichara, stated on November 7, 2024, at the Buenos Aires Forum, that the approved text of the tax reform creates legal uncertainty.
He stated that the text presents normative contradictions and lack of technical clarity on key points of the new model.
Moreover, he stressed that the implementation of the “sin tax” generates economic distortions.
This occurs because the tax affects strategic products, such as iron ore, even though it is one of the most relevant items in the Brazilian trade balance.

Decision on Topic 1,182 Regarding ICMS, IRPJ (Corporate Income Tax), and CSLL (Social Contribution on Net Profit) Incentives Conflicts with the Stance of the Federal Revenue

Direct Impact on Strategic Sectors

According to Bichara, the new tax could harm the competitiveness of essential sectors.
This occurs because the model creates conflicts between tax norms, which compromises predictability and may deter investments.
He highlighted that the concept of effective rate does not exist in the legislation.
“If the company is taxed at an effective rate of 34%, the 10% of the individual is not taxed.”, he stated.
He then questioned: “But what is an effective rate?”.
Additionally, he emphasized that there is no clarity regarding deductions for tax losses.
This lack of clarity creates the risk of taxation on assets.

ARTICLE CONTINUES BELOW

Contradictions in Profit Taxation

The attorney warned that the taxation of accumulated profits violates basic principles of legal certainty.
This problem arises because it interferes with gains obtained during periods of existing exemptions.
“Of course, the profit generated while the exemption regime was in effect cannot be taxed now.”, he stated.
He reinforced that this measure violates legal certainty.
Moreover, the attorney indicated that the approved text presents legal contradictions.
According to him, the project allows declared and paid profits in 2024 to be distributed until 2028.
However, the SSA law prevents the distribution of profits approved in one year to another.
This scenario thus creates a primary normative conflict.

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2025 Tax Reform Exposes Hidden Flaws and Puts Brazil on a Path to Legal Conflicts with Controversial “Sin Tax”

OAB Criticism About Risks and Distortions

Direct Impact on Strategic Sectors

Contradictions in Profit Taxation

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