The Brazilian government enacted Complementary Law No. 225 on 9 January 2026, establishing the Taxpayer Protection Code (TPC), a comprehensive framework governing the relationship between taxpayers and the tax administration. The TPC consolidates the rights, guarantees and duties of both taxpayers and the tax authorities and formalises structured compliance programs. It promotes voluntary compliance while imposing stricter rules and penalties on "habitual tax debtors." Overall, the TPC aims to increase transparency, support cooperative compliance and balance taxpayer protections with effective tax administration.
The TPC incorporates and modernises three compliance initiatives of the Federal Revenue Service (the Brazilian federal tax authorities):
The TPC codifies several taxpayer rights already embedded in Brazilian tax and administrative practice, including the right to:
One of the most notable—and controversial—features of the TPC is the creation of the “habitual tax debtor” classification. The law establishes objective criteria and significant administrative consequences for taxpayers deemed to exhibit substantial, repeated and unjustified noncompliance. For federal tax purposes, substantial noncompliance is defined as irregular tax debts equal to or exceeding BRL 15 million and greater than 100% of the taxpayer’s known equity. Different thresholds for irregular debts and/or unpaid tax debts may apply at the state, district and municipal levels. Repeated noncompliance occurs when delinquency persists for four consecutive periods or six alternating periods within 12 months. “Unjustified” noncompliance refers to the absence of objective grounds that would prevent the classification.
The consequences of being formally designated an habitual tax debtor are serious. Such a taxpayer may face (individually or cumulatively):
The TPC authorises the publication of habitual debtor lists on the tax authorities’ websites, creating potential reputational and operational risks. The tax authorities will manage the registration and removal of habitual tax debtor status and may share data with other federal agencies, which may also publish their own lists. The law also amends the federal public‑sector default registry, the Penal Code and tax criminal legislation, narrowing the circumstances under which criminal liability may be extinguished for habitual tax debtors.
Brazilian taxpayers should review the new TPC carefully, particularly those with outstanding tax liabilities that could trigger the habitual tax debtor classification. Sub-national governments, i.e., the Brazilian states, the federal district and municipalities, have one year to align their local legislation with the new TPC, meaning further developments can be expected throughout 2026.
Edilson Muniz da Silva
Queli Morais
BDO in Brazil
Integration of Existing Compliance Programs
The TPC incorporates and modernises three compliance initiatives of the Federal Revenue Service (the Brazilian federal tax authorities):
- Confia (Cooperative Tax Compliance Program), a voluntary program emphasising cooperation and dialogue between taxpayers and the tax authorities. Already familiar to large corporate taxpayers through a prior pilot, Confia establishes governance procedures and offers “incentives” for compliant behaviour.
- Sintonia (Tax Compliance Incentive Program), a program open to all taxpayers that promotes best practices and uses advanced technological tools to classify taxpayers based on their compliance profile. Higher classifications may result in enhanced benefits, including reduced tax rates.
- OEA (Brazilian Authorised Economic Operator Program), an established and internationally recognised customs compliance program focused on supply chain security. Under the TPC, OEA’s legal framework is updated, and qualifying participants with strong controls and compliance histories may receive benefits such as deferred customs duty payments and priority clearance.
Key Features of the TPC
The TPC codifies several taxpayer rights already embedded in Brazilian tax and administrative practice, including the right to:
- Receive clear communications;
- Be treated with respect;
- Have access to administrative case files;
- Review personal information held by the tax authorities;
- Challenge restrictive or punitive actions;
- File at least one administrative appeal against adverse decisions;
- Avoid submitting documents already in the tax administration’s possession;
- Obtain legal assistance in administrative proceedings;
- Receive decisions within a reasonable time; and
- Tax confidentiality.
One of the most notable—and controversial—features of the TPC is the creation of the “habitual tax debtor” classification. The law establishes objective criteria and significant administrative consequences for taxpayers deemed to exhibit substantial, repeated and unjustified noncompliance. For federal tax purposes, substantial noncompliance is defined as irregular tax debts equal to or exceeding BRL 15 million and greater than 100% of the taxpayer’s known equity. Different thresholds for irregular debts and/or unpaid tax debts may apply at the state, district and municipal levels. Repeated noncompliance occurs when delinquency persists for four consecutive periods or six alternating periods within 12 months. “Unjustified” noncompliance refers to the absence of objective grounds that would prevent the classification.
The consequences of being formally designated an habitual tax debtor are serious. Such a taxpayer may face (individually or cumulatively):
- Loss of tax benefits;
- Prohibition from participating in public bids or contracting with the government;
- Ineligibility for registration in taxpayer registries while the delinquency persists; and
- Stricter procedures in federal administrative litigation.
The TPC authorises the publication of habitual debtor lists on the tax authorities’ websites, creating potential reputational and operational risks. The tax authorities will manage the registration and removal of habitual tax debtor status and may share data with other federal agencies, which may also publish their own lists. The law also amends the federal public‑sector default registry, the Penal Code and tax criminal legislation, narrowing the circumstances under which criminal liability may be extinguished for habitual tax debtors.
BDO Takeaway
Brazilian taxpayers should review the new TPC carefully, particularly those with outstanding tax liabilities that could trigger the habitual tax debtor classification. Sub-national governments, i.e., the Brazilian states, the federal district and municipalities, have one year to align their local legislation with the new TPC, meaning further developments can be expected throughout 2026.Edilson Muniz da Silva
Queli Morais
BDO in Brazil