Brazil Lei do Bem R&D Tax Incentive 2026
Program Overview
Lei do Bem (Law No. 11.196/2005), administered by the Ministry of Science, Technology and Innovation (MCTI), is Brazil's most comprehensive tax incentive for innovation. The law provides a 'super deduction' mechanism designed to reduce institutional barriers and encourage R&D investment by Brazilian companies.
Super Deduction Benefits
Base Super Deduction: 160% deduction of R&D expenses from IRPJ and CSLL taxable income, increasing to 170% (up to 5% researcher growth) or 180% (over 5% researcher growth), per OECD STIP
Patent Bonus: Additional 20% deduction for costs incurred in developing registered patents
Effective Tax Reduction: 20.4% to 34% reduction in income tax (IRPJ) and social contribution (CSLL) on R&D expenditures
Total Benefit: Combined income tax and CSLL deductions create substantial savings
Additional Tax Benefits
IPI Reduction: 50% reduction in industrialized products tax on R&D machinery and equipment purchases
Accelerated Depreciation: Immediate or accelerated amortization of R&D machines and equipment
Income Tax Exemption: On remittances abroad for registration and maintenance of patents, trademarks, and plant varieties
Immediate Depreciation: Full depreciation of R&D equipment in year of acquisition
Eligibility Requirements
Companies operating under 'Lucro Real' (actual profit) tax regime
R&D activities conducted within Brazil
Profit-making companies (not in loss position)
Compliance with tax obligations
R&D activities must qualify as technological innovation
Proper documentation and accounting of R&D expenses
Submission of annual report to Ministry of Science, Technology and Innovation (MCTI)
Qualifying R&D Activities
Development of new products or production processes
Technological innovation in existing products or processes
Basic and applied research
Experimental development
Pilot projects and prototypes
Industrial design for technological innovation
Software development (if represents technological innovation)
Application Process
- Ensure company operates under Lucro Real tax regime
- Document all R&D activities and expenses separately
- Maintain detailed technical reports of innovation activities
- Calculate eligible R&D expenses according to Lei do Bem guidelines
- Apply super deduction in annual corporate tax return (IRPJ/CSLL)
- Submit annual report to MCTI via online portal
- Retain documentation for audit purposes (5-10 years)
- Consider engaging tax/innovation consultants for compliance
2026 Tax Reform Context
Supplementary Law 214/2025 introduced new taxes (IBS, CBS, Selective Tax) with gradual implementation starting 2026. The government has focused on maximizing tax collection with some restrictions on tax incentive calculations for IRPJ/CSLL and PIS/COFINS. However, Lei do Bem core benefits remain operational for qualifying companies.
Key Advantages
Automatic benefit (no pre-approval required)
One of the most generous R&D tax incentives in Latin America
Multiple stackable benefits (super deduction + IPI + depreciation)
No cap on total R&D expenses eligible
Bonus deduction for patent development
Reduces both income tax and social contribution
Can be combined with BNDES/FINEP grants and other programs
Contact Information
Ministry of Science, Technology and Innovation (MCTI) Lei do Bem Portal: https://www.gov.br/mcti
Receita Federal do Brasil (Federal Revenue) Website: https://www.gov.br/receitafederal
Consult with Brazilian tax advisors and innovation consultants for compliance guidance
Common Questions
Under Lei do Bem (Law 11.196/05), qualifying expenses include salaries and benefits for R&D personnel, consumable materials used in research, equipment depreciation, contracted R&D services from Brazilian institutions, patent filing costs, and technology transfer expenses. Companies can deduct 60% to 100% of these expenses from their taxable income, with additional deductions available for companies that increase their R&D headcount.
No, Lei do Bem operates on a self-assessment basis without requiring prior government approval. Companies can apply the tax incentives directly in their annual tax filings, provided they meet all requirements including being on the lucro real (actual profit) tax regime and being current on all federal tax obligations. However, companies must submit an annual report to MCTIC detailing their R&D activities and expenditures by July of the following year.
Lei do Bem allows qualifying lucro real enterprises to apply R&D deductions directly in tax filings without prior government approval or competitive selection. Companies document qualifying innovation expenditures and claim enhanced deductions automatically. This self-declaration mechanism reduces administrative burden compared to FINEP grants requiring extensive proposals. Post-filing verification occurs through annual Ministry reporting obligations.
Companies hiring additional full-time researchers with recognized qualifications may claim enhanced super-deduction percentages on personnel R&D expenditures. This employment component reflects Brazil's objective of expanding the national scientific talent base. Companies must document researcher credentials, employment terms, and proportional time allocation to qualifying activities through contemporaneous personnel records.
References
- R&D Tax Allowance Details — Brazil. OECD STIP. View source
- Innovation Funding Incentives: Brazil. ABGi. View source
- Lei do Bem — Tax Incentives for Technological Innovation. Journal of Technology Management and Innovation. View source
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