Complementary Law No. 236/2026: Amendments to the Brazilian Tax Code and Advances in the Resolution of Tax and Customs Disputes

The Supplementary Law No. 236/2026 (“LC No. 236/2026”) introduced significant amendments to the Brazilian Tax Code (“CTN”), the main aspects of which are summarized below.

Penalties

Article 113-A of the CTN now establishes a cap on penalties for noncompliance with tax obligations: 75% as a general rule; 100% in cases of willful misconduct; fraud, tax evasion or collusion; and 150% in cases of repeat offenses.

It should be noted, however, that this rule does not apply to isolated fines not linked to a tax liability or credit amount.

Another significant change was the provision in Article 142 for percentage reductions in penalties based on the timing of payment or installment arrangements, as well as differentiated treatment for taxpayers participating in tax compliance programs.

In addition, Article 138 now expressly provides that the voluntary disclosure also excludes late-payment penalties, which reinforces the benefit of voluntary regularization before the initiation of tax proceedings.

Taxpayer Safeguards in Tax Audits and Collection

Law No. 236/2026 inserted paragraphs 5 and 6 into Article 150 of the CTN, establishing that, in the event of partial payment, the statute of limitations shall be calculated from the occurrence of the taxable event. It also stipulates that, in cases involving willful misconduct, fraud, or sham transactions in tax assessments subject to subsequent ratification (“lançamento por homologação”), the limitation period set forth in Article 173, I, shall apply.

For cases in which the enforceability of a tax claim is suspended—as provided for in Article 151 of the CTN, among other changes—Provisional Law No. 236/2026 included the establishment of: a special tax and customs arbitration; a settlement proposal accepted by the tax administration; an agreement resulting from mediation; and the acceptance of an insurance bond and a bank guarantee in tax enforcement proceedings.

Furthermore, the CTN expressly prohibits the requirement of a bond or deposit as a condition for filing objections and administrative appeals.

Regarding the deadline for filing a claim for a tax refund, LC No. 236/2026 expressly provides that the taxpayer has five years—counted from the date the decision recognizing the overpayment became final and binding—to file a claim for that credit with the Tax Administration.

Another change introduced by LC No. 236/2026 is the expansion and clarification of the circumstances under which the statute of limitations is interrupted, as provided for in Article 174 of the CTN, including extrajudicial and judicial protests, as well as mediation and arbitration proceedings.

Administrative Litigation

We note that LC No. 236/2026 introduced a chapter into the CTN establishing general rules governing the Administrative Tax Proceeding.

Thus, the CTN now establishes minimum requirements for: the tax assessment notice; suspensive effect; levels of jurisdiction; appeals; deadlines; oral arguments; evidence; public notice; nullities; and precedents, thereby creating a national standard for procedural safeguards.

Furthermore, LC No. 236/2026 makes it mandatory for the tax authorities to observe binding precedents issued by the Upper Courts, as well as other circumstances provided for in the CTN, and to align their administrative and judicial proceedings with such guidance.

Alternative Dispute Resolution Methods

The CTN now expressly incorporates special tax and customs arbitration and mediation as dispute resolution mechanisms and, consequently, as methods for extinguishing tax claims.

The law also assigns specific tax effects to these procedures: a final and binding arbitral award in favor of the taxpayer and compliance with the mediation agreement now constitute grounds for the extinction of the tax liability.

Therefore, the amendments expand the avenues available for resolving tax disputes, providing taxpayers greater flexibility in choosing the method best suited to the nature and complexity of the dispute.

Deadline for State and Local Governments to Comply and Automatic Application

Law No. 236/2026 provides two years for the Federal District, States, and the Municipalities to update their tax and customs legislation, both with regard to the criteria for the moderation of sanctions and the determination of penalty amounts, as well as with regard to the guarantees of due process, the right to a full defense, the right to appeal to a higher court, and the right to be heard in tax administrative proceedings.

If the federal entities fail to make these adjustments within the deadline, the general provisions of LC No. 236/2026 on tax administrative proceedings will be applied automatically and directly until specific legislation is enacted, which must, at minimum, comply with the parameters set forth therein.

In summary, LC No. 236/2026 introduces significant changes in the relationship between tax authorities and taxpayers, both by strengthening safeguards in the areas of tax audits and litigation, and by establishing clearer parameters for the imposition of penalties and incorporating alternative dispute resolution mechanisms.

For more information on LC No. 236/2026 and its potential impacts, please contact our tax team.