Missed opportunities for innovation and intellectual property in Brazil’s tax reform

Abstract Brazil’s tax reform, established by Constitutional Amendment 132/2023 and regulated by Complementary Law 214/2025, modernizes its fiscal structure but fails to establish a cohesive strategy for the intangible economy. Through a normative-legal and policy analysis, this article examines how the omission of an IP box regime and the introduction of new consumption tax burdens (Imposto sobre Bens e Serviços/Contribuição sobre Bens e Serviços) on IP commercialization affect the capture of IP value, location of intangibles and innovation incentives. Drawing on the economic framework for intangible capital, our analysis finds that the reform creates a severe misalignment between innovation policy and taxation. Sectoral asymmetries, such as preserving constitutional immunity for the book industry while increasing taxes for high-growth sectors like electronic games, weaken IP incentives and Brazil’s international competitiveness, exacerbating existing policy challenges for the intangible economy.