Brazilian tax litigation has accumulated liabilities estimated at over R$ 5 trillion — evidence of the systemic collapse of traditional tax dispute resolution mechanisms. In light of this situation, the country is experiencing an unprecedented convergence between two distinct but complementary normative fronts: domestically, Bill No. 2,486/2022, which proposes the institutionalization of arbitration in tax and customs matters; and internationally, Brazil’s accession, on October 20, 2025, to the Multilateral Instrument (MLI), developed within the OECD based on the recommendations of Action 15 of the BEPS Project. [1]
The timing is not accidental. It reflects a broader reorientation of Brazilian tax policy, which now recognizes arbitration—both domestic and international—as a legitimate and necessary instrument for tax dejudicialization. The approval of the bill, combined with the careful ratification of the MLI (Brazilian Tax Law), could structurally alter the relationship between tax authorities and taxpayers, with direct impacts on the business environment, legal certainty, and the cost of capital in the country. This article examines the main characteristics of Bill 2,486/2022, comparing them with the arbitration provisions of Part VI of the MLI, in order to identify the challenges and opportunities that this dual regulatory agenda presents for taxpayers, tax administrations, and legal professionals.
Context of the reform: dejudicialization and tax litigation
Tax arbitration is part of a broader movement to reform tax litigation, which also includes tax transactions [2] , mediation and self-regulation mechanisms. The objective is to rationalize the volume of litigation that overburdens the CARF, state administrative courts and the Judiciary. With more than R$ 5 trillion in dispute and a tax success rate in the STJ and STF that historically fluctuates between 20% and 30%, the current model is dysfunctional for both sides: the taxpayer lives with prolonged uncertainty and high financial costs; the tax authorities, with entries in active debt that are difficult to recover. The rapporteur of the PL in the Senate, Efraim Filho (União-PB), even stated that the initiative would be as relevant as the consumption tax reform itself — given that tax litigation is a central component of the cost of doing business in Brazil.
In constitutional terms, the viability of tax arbitration is based on Article 22, I, of the Constitution, expressly invoked by the PL in its Article 1. [3] The doctrinal debate on the (un)availability of tax credit as an obstacle to arbitration has been largely overcome: the arbitral award does not imply disposal of the credit, but a technical determination of its value or existence. The arbitrator does not compromise, judges the validity, constitutionality and adapts the collection to the law.
PL 2.486/2022: regulatory architecture
Bill 2,486/2022, unanimously approved by the Senate in June 2024 and currently under review in the Chamber of Deputies (attached to Bill 2,791/2022), was drafted by the Commission of Jurists created jointly by the Senate and the Supreme Federal Court. Structured in 11 chapters, its main guidelines are as follows.
Object, scope and prohibitions
The bill covers taxes, fines, interest and late payment charges of any kind, including customs and antidumping law issues. Arbitration may be requested at any time — from the administrative phase to tax enforcement — provided there is no final and unappealable court decision or unequivocal acknowledgment of the debt. [4] Arbitration based on equity, discussion of the constitutionality of abstract norms, and the pronouncement of a judgment that results in a special tax regime are expressly prohibited — limitations that preserve the general normative character of tax legislation.
Procedure, deadlines and incentives
Initiated at the request of the taxpayer, arbitration is always institutional (ad hoc arbitration is prohibited). The arbitration agreement automatically suspends the administrative and judicial processing of the credit. The arbitrator is equated to a judge of fact and law, with the sentence producing effects equivalent to those of a judicial decision (CTN, articles 151, V and 156, X). [5] The project sets a maximum period of 12 months for the instruction and sixty working days for the sentence, without extension. To encourage adherence, it provides for reductions in fines in federal procedures: 60% if arbitration is requested within fifteen working days of the infraction notice; 30% before the first instance administrative decision; and 10% before the second instance decision, registration as an active debt, or judicial summons. [6]
Precedents and nullity control
The arbitral award must observe the qualified precedents of the superior courts (CPC, article 927), under penalty of express nullity (PL, article 29, X). Article 31 also determines the application of the General Repercussion Themes 881 and 885 of the STF, relating to res judicata in continuous tax relations. [7] The solution is technically reasonable, but it imposes on arbitral chambers and arbitrators continuous updating on binding jurisprudence, making technical specialization an essential requirement for accreditation. The annulment action must be filed within 180 days of notification, in the exhaustive cases of article 19; non-compliance implies registration as an active debt, prohibiting the rediscussion of the decided issues.
Multilateral Instrument (MLI): international dimension
On October 20, 2025, Brazil became the 106th jurisdiction to adhere to the MLI [8] — an agreement that covers approximately 2,000 bilateral treaties and functions as an umbrella protocol: after each country ratifies it and indicates its reservations, the MLI inserts or replaces clauses of the Agreements to Avoid Double Taxation (ADTs) without the need for individual bilateral renegotiation. For Brazil, still pending ratification by Congress, the MLI has the potential to update twenty-six ADTs in force.
Part VI: Mandatory Binding Arbitration
In addition to improving the Mutual Agreement Procedure (MAP — Article 25 of the OECD Model), the MLI introduces, through Part VI (Articles 18 to 26), mandatory binding arbitration as a supplementary mechanism to the MAP. [9] Part VI is optional: it applies to a treaty only when both contracting countries adopt it. Thirty-four jurisdictions have already made this choice. Brazil has not formally expressed its opinion when signing the instrument — the decision will occur upon deposit of ratification. Historically resistant to binding arbitration in DATs (as demonstrated by the 2017 protocol with Argentina, limited to the minimum standard of Action 14 of BEPS), the country now has the opportunity to review this stance.
Operation and main provisions
Article 19 is the operational core: if the MAP fails within two years [10] , any unresolved issue must, at the taxpayer’s request, be submitted to arbitration. The decision is final and binding on both States, with exceptions only if the taxpayer refuses the implementation agreement, if a court in either State declares its invalidity, or if an action is brought on the same issues. The panel is composed of three arbitrators with expertise in international taxation, appointed by the competent authorities according to a tiered process with a subsidiary appointment mechanism by the OECD — a guarantee that state inaction does not block the procedure. [11]
Regarding the type of process, Article 23 offers two models: baseball arbitration (final offer arbitration), in which the panel chooses one of the proposals presented by the authorities, without an intermediate solution — a model that encourages realistic proposals; and independent opinion arbitration, in which the panel decides based on the treaty and domestic law, justifying the decision. Article 24 provides for consensual review of the decision within three months, [12] a provision criticized for reintroducing uncertainty after the decision has been issued. Secrecy is the rule in the MLI (Article 21), in contrast to the general publicity of PL 2,486/2022 — a relevant tension for taxpayers in simultaneous litigation in both areas.
Anti-avoidance clauses and the increase in conventional litigation.
Beyond the arbitration dimension, the MLI introduces anti-avoidance clauses that tend to increase conventional litigation: the Main Purpose Test (MPT), which allows for the denial of treaty benefits when obtaining a tax advantage is one of the main objectives of the operation; the Limitation of Benefits Rule (LOB), which restricts access to residents with substantial economic ties to the contracting State; and more restrictive definitions of permanent establishment. The adoption of the MPT, in particular, expands the discretionary power of tax administrations—making robust mechanisms of MAP and binding arbitration even more indispensable to guarantee definitive and predictable solutions.
Convergences and tensions between the two regimes
The main point of convergence is the common goal: to reduce tax litigation through technical, swift, and specialized mechanisms. Both instruments recognize the inadequacy of ordinary judicial proceedings for complex tax disputes and establish binding decisions not subject to ordinary appeal—albeit with specific grounds for annulment or non-application. There is also structural convergence: Part VI of the MLI presupposes domestic legislation authorizing arbitration, so the approval of Bill 2,486/2022 is a necessary condition for Brazil to adopt binding arbitration in double taxation agreements in the future.
Tensions are equally relevant. Regarding scope: the Bill regulates domestic disputes (taxpayer versus Brazilian tax authorities); Part VI of the MLI is an interstate mechanism (competent authority versus competent authority). There is still no coordinated regulation between the two procedures—a particularly sensitive gap in transfer pricing disputes, where the same taxpayer may simultaneously be in domestic arbitration before an accredited chamber and in MAP with the Brazilian Federal Revenue Service and the foreign tax authority, risking contradictory decisions on the same transaction. Regarding the application of precedents: the Bill imposes compliance with binding Brazilian case law [13] , while MLI arbitration decides based on the treaty and OECD commentaries; any divergence between interpretations may generate conflicts that will require specific normative solutions. Regarding publicity: the Bill adopts transparency in arbitration proceedings as a rule, while international arbitration follows the confidential tradition of MAP—opposing regimes that will require coordinated regulation for taxpayers in dual-dimension disputes.
Conclusion
Brazil is experiencing the most favorable moment in its history for the consolidation of tax arbitration. Bill 2,486/2022—unanimously approved in the Senate with broad technical support—and the MLI (Labor Market Information) converge towards the same objective: to equip the tax system with more efficient, technical, and predictable mechanisms for dispute resolution. The approval of the bill, combined with the careful ratification of the MLI—including the eventual adoption of Part VI—could represent a qualitative shift in the relationship between tax authorities and taxpayers, with clear benefits for the business environment and legal certainty.
The challenge is political before it is technical. It requires the construction of independent and specialized arbitration chambers, with rigorous accreditation criteria—otherwise, the vices of traditional litigation will be reproduced in the new environment—harmonious sub-legal regulation at all three federal levels, and a review of the historical stance of resistance to binding arbitration in labor dispute resolution procedures. Regarding the MLI (Monetary Litigation Initiative), ratification by Congress must be accompanied by in-depth debate on the reservations to be formulated and, especially, on the advisability of adopting Part VI: coherence between domestic tax policy and international conventional policy is, today, a requirement for credibility. Submitting tax arguments to the scrutiny of a neutral third party does not weaken tax sovereignty—on the contrary, it improves it, conferring upon it the attribute that matters most in a modern economy: predictability.
[1] OECD. Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). Paris, 2016. Action 15 of the BEPS Project.
[2] Law No. 13.988/2020 (Tax Transaction Law).
[3] Bill No. 2,486/2022, art. 1; Federal Constitution, art. 22, I.
[4] Bill No. 2,486/2022, articles 4 and 5 (object and material scope); article 7 (express prohibitions).
[5] Bill No. 2,486/2022, arts. 8 to 11 (arbitration procedure and commitment); CTN, arts. 151, V and 156, X.
[6] Bill No. 2,486/2022, art. 12 (deadlines); art. 15 (reductions in fines).
[7] Bill No. 2,486/2022, arts. 29, X and 31 (qualified precedents; Themes 881 and 885 of the STF); CPC, art. 927.
[8] Brazil became the 106th signatory jurisdiction on October 20, 2025, in a ceremony at the OECD headquarters in Paris, represented by Ambassador Sarquis José Buainain Sarquis.
[9] MLI, art. 18 (optional nature of Part VI); currently thirty-four jurisdictions have adopted the arbitration provisions.
[10] MLI, art. 19, §§ 1 to 11. The standard term of two years may be extended to three years by reservation of the State, under the terms of § 11.
[11] MLI, arts. 20 to 26: panel constitution, confidentiality, early resolution, types of arbitration, consensual review, costs and compatibility with other instruments.
[12] MLI, art. 24 (consensual review of the arbitral decision, within three months).
[13] STF, RE 574.706 (Topic 69 — exclusion of ICMS from the PIS/COFINS base); STF, Topics 881 and 885 (res judicata in ongoing tax relations). Cf. PL 2.486/2022, art. 31.
She is a founding partner of CMO Advogados, holds a doctorate and master’s degree in Tax Law from PUC-SP, is a professor at IBDT, Mackenzie and Ibet, and is the founder and president of Tax & Women.