The LC 236/26 has profoundly altered the National Tax Code, introducing a significant change in the management of tax penalties, notices of infraction, and tax liabilities for companies. One of the main novelties is the creation of national limits for certain penalties, accompanied by criteria of reasonableness, proportionality, and measurement.
This change deserves attention not only for future tax audits but also for companies with pending tax disputes. The combination of the new limits set by LC 236/26 and the rule of benign retroactivity of Article 106 of the National Tax Code may justify the revision of penalties that have not yet been definitively judged.
Impact on Companies
For many companies, the most relevant consideration is whether part of their current tax liability has become excessive after LC 236/26. The new law establishes new limits for tax penalties, with a general ceiling of 75% and the possibility of reaching 100% in cases of proven fraud, tax evasion, or collusion, and 150% in cases of recurrence.
Isolated penalties not linked to the value of the tax or credit are explicitly excluded from these ceilings. This change has practical relevance because it introduces a national parameter for controlling tax penalties directly into the National Tax Code.
Read Also: Brazil Introduces New Rules for Notary Exams
Revision of Penalties
Before LC 236/26, a company could face federal, state, and municipal legislation with very different percentages and prolonged discussions about proportionality or the confiscatory nature of the penalty. Now, there is a new legislative starting point.
For legal and financial departments, this means that tax penalties exceeding the new limits need to be revisited. The revision can reach tax penalties already applied, provided the process has not been definitively judged.
The article 106, II, “c”, of the National Tax Code establishes that a later law applies to an act not yet definitively judged when it establishes a less severe penalty than that provided at the time the infraction was practiced. This is the so-called benign retroactivity of the tax sanction law.
Assessing the Impact
In practice, this means that a company with a notice of infraction still under discussion administratively or judicially must assess whether the originally applied penalty remains compatible with the limits now established by LC 236/26. An example helps to visualize the impact: imagine a company with a notice of infraction of R$ 12 million, of which R$ 5 million corresponds to tax penalties.
Read Also: Brazilian courts struggle with Alexy’s balancing theory
If part of these penalties is above the new legal ceiling and the process has not yet been definitively judged, there may be grounds for discussing the reduction of the penalty. The consequence is not only legal but also economic, as a potential reduction of the penalty can alter the economic value of the tax liability, the strategy for continuing the process, the analysis of tax transactions or installment payments, and exposure in audits and due diligence.
In business groups with a relevant portfolio of notices of infraction, the aggregate effect can be significant. However, it is necessary to avoid a simplistic interpretation: LC 236/26 does not determine that every current penalty in discussion will be automatically reduced.
Evaluation and Governance
Each notice of infraction must be analyzed individually, verifying the nature of the penalty, whether the penalty is linked to the value of the tax, if there is an imputation of fraud, tax evasion, or collusion, and if there has already been a definitive judgment. The business opportunity lies not in presuming that all liabilities have fallen but in identifying which contingencies need to be reassessed in light of the new legislation.
LC 236/26 also changes the measurement of tax penalties, introducing a broader structure for reduction and measurement of tax penalties. The new rule provides for a reduction of 50% of the penalty when there is full payment of the tax credit within the period for administrative appeal and a reduction of 40% when there is installment payment in the same period.
Read Also: Germany tightens Afghan asylum checks to formal reviews
The law also expressly recognizes mitigating circumstances that can justify more favorable treatment, including good tax history, absence of harm to the treasury, regularization of conduct during inspection, excusable error of fact, and existence of pending legal controversy in higher courts. This change amplifies the importance of tax governance, as compliance with tax regulations now has a clearer economic effect.
For companies, this represents an important change, as investments in tax controls, review of accessory obligations, and compliance programs were previously justified mainly as instruments of prevention. Now, the history of compliance can directly influence the economic cost of a potential tax penalty, changing the logic of investment in governance and making tax compliance an asset in managing tax liabilities.
They must assess their current situation and identify areas where the new law applies.
Companies will need to evaluate their tax liabilities and penalties in light of the new legislation.
