While tax reform is often viewed solely through a fiscal lens, its effects extend into other areas of law. Supplementary Law No. 214/2025 significantly restructures the revenue system, altering the economic foundations of many contracts drafted under the previous tax model. This shift has direct implications for Contract Law.

Although it is not yet time for detailed simulations or the use of tax calculation tools—given undefined tax rates and pending regulatory guidance—companies should not remain passive about contract reassessment.

The new tax regime will directly affect the cost and revenue structures of private contracts, especially long-term agreements. Reviewing and adjusting existing contracts and business arrangements should remain a priority, even amid regulatory uncertainty on tax rates and collection methods.

Ongoing private contracts—especially those with extended terms—face a heightened risk of imbalance if they lack mechanisms to adjust to the new conditions. This could jeopardize performance, making it essential for parties to stay alert and take preventive steps to avoid economic distortions and future disputes.

This is where legal risks for companies become more pronounced:

• Prolonged and costly litigation due to the absence of clear contract clauses on how to adapt to the new tax environment;
• Contract termination due to nonperformance caused by unexpected cost increases that make performance unfeasible for the more heavily burdened party;
• Unilateral adjustments or forced renegotiations, often conducted under pressure, disrupting the original balance of the contractual relationship;
• Legal uncertainty and reputational risk, both heightened in business environments marked by unpredictability, litigation, and regulatory instability.

Lack of contractual provisions for tax-related adjustments can lead to costly disputes, strained business relationships, and reputational damage. This highlights the role of Contract Law in private transactions, especially in designing clauses that ensure long-term balance and workability.

One key example is the tax adjustment clause, which allows contract values to be revised when tax burdens on the contract’s subject matter change. Another is the economic equilibrium clause, which guarantees the right to renegotiate contract terms when legislative changes substantially impact the contract’s economic foundations.

Reviewing contracts, reassessing clauses, and drafting new agreements with a focus on tax impacts is not just a precaution—it is essential for ensuring legal certainty, predictability, and balance in today’s commercial relationships. It is also a strategic step to help companies adapt to the new tax landscape, protect their interests, and mitigate emerging contractual risks.

Glossary

Supplementary Law No. 214/2025: Brazilian legislation establishing the new tax framework, which restructures the country’s tax and revenue system.

Tax Calculation Tools: Software or models used by companies to simulate and calculate tax impacts under different tax regimes.

Legal Certainty: The principle that ensures laws are clear, public, and predictable, allowing parties to understand their rights and obligations.