Brazil’s Federal Supreme Court (Supremo Tribunal Federal, or STF) has delivered a significant ruling for the country’s largest companies, forming a majority to allow the immediate taxation of profits earned by Brazilian multinationals through their foreign subsidiaries, even if those profits are not distributed back to Brazil. The 6-5 decision allows the federal government to levy Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL) on these undistributed foreign profits on an accrual basis at the end of each fiscal year. This new interpretation overturns a long-standing legal understanding that protected multinationals from this tax burden, especially when subsidiaries were located in countries with which Brazil had signed Double Taxation Treaties (DTTs).