How the “One Big Beautiful Bill” (2025) Impacts Brazilian Companies in the U.S.

Companies in Brazil | Companies in the U.S. | U.S. Tax

What Changed

In 2025, the U.S. introduced the “One Big Beautiful Bill” Act (H.R.1), a comprehensive tax package that extends and modifies key elements of U.S. tax policy, updates international tax rules (including GILTI and FDII), and reinforces incentives for domestic investment.

For Brazilian companies with U.S. operations, these changes directly affect effective tax rates, compliance requirements, and cross-border structuring.

Overview of the Changes

• Expansion and adjustment of pro-business incentives, including the return of full immediate expensing and updates to the Section 199A (QBI) deduction
• Tighter international tax rules, increasing the effective taxation of foreign income
• Labor-related provisions that may indirectly impact payroll costs

In practice, the new framework strengthens incentives to invest and operate within the U.S., while increasing scrutiny on cross-border structures—especially those involving intangibles and intercompany services.

Key International Tax Changes

1. GILTI: Reduced Section 250 Deduction

• Deduction reduced from 50% to 40% (effective after December 31, 2025)
• Results in a higher effective tax rate on foreign income

Implication:
Brazilian groups using low-tax jurisdictions may need to revisit pricing models and restructure value chains.

2. FDII: Reduced Benefit

• Deduction reduced from 37.5% to 33.34%
• Increases effective taxation on qualifying export income

Implication:
Companies exporting from the U.S. will see reduced tax advantages and may need to adjust pricing and contractual arrangements.

3. Additional Provisions

• Section 199A (QBI): 20% deduction maintained and made permanent (relevant for pass-through entities)
• Immediate Expensing: 100% expensing restored, supporting capital investment and reshoring strategies

State Tax and Nexus Considerations

Although the legislation is federal, state-level tax rules continue to evolve.

In 2025, several states removed the 200-transaction threshold, relying instead on revenue thresholds (commonly $100K–$500K).

For Brazilian companies in e-commerce or SaaS:

• Nexus may be triggered more quickly based on revenue alone
• Sales tax registration and compliance must be actively monitored

Key Impacts for Brazilian Companies

• Higher effective tax rates on foreign income (GILTI) and reduced export incentives (FDII)
• Increased importance of transfer pricing and intercompany structuring
• Stronger incentives to invest directly in U.S. operations
• Ongoing multistate compliance requirements driven by economic nexus rules

Recommended Action Plan

1. Update Tax Modeling

• Recalculate effective tax rates considering new GILTI and FDII rules
• Model different pricing and structuring scenarios

2. Review Value Chain and IP Structure

• Reassess where value is created and how it is compensated
• Evaluate potential benefits of shifting operations or functions to the U.S.

3. Strengthen Governance and Documentation

• Update transfer pricing documentation (Master File, Local File)
• Prepare for increased scrutiny of intercompany transactions
• Conduct state-by-state nexus reviews

4. Reevaluate Entity Structure

• Compare pass-through vs. C-Corp structures in light of Section 199A and distribution strategies

Common Mistakes to Avoid

• Treating the new law as a simple extension of prior rules without accounting for GILTI/FDII changes
• Ignoring state tax obligations due to lack of physical presence
• Delaying adjustments to transfer pricing and intercompany arrangements

Final Takeaway

The “One Big Beautiful Bill” represents a meaningful shift in how multinational companies are taxed in the U.S. For Brazilian groups, the changes increase complexity—but also create opportunities for those who adapt quickly.

Strategic planning, updated modeling, and strong compliance practices are now essential to remain competitive and efficient in the U.S. market.

Need help navigating these changes and optimizing your cross-border structure?
Work with Zecca Ross Law to ensure your tax strategy is compliant, efficient, and aligned with your global operations.

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