Answer ... Tax consolidation is not generally permitted by Brazilian accounting rules or tax rules, which generally require the submission of individual statements, except in some specific limited situations.

Investments in controlled or affiliated entities must be evaluated using the equity method. Under this method, the book value of the investments is accrued to the investor, to reflect the value of its interest in the total equity of the subsidiaries.

Under the Brazilian controlled foreign corporation (CFC) rules, until 2022, a parent company may consolidate positive and negative results of foreign controlled or affiliated companies (proportionate to its share in those companies) in its books, unless the circumstances for mandatory application of the CFC rules to affiliated foreign companies are met or the foreign entity does not generate at least 80% active income. Profits earned overseas by foreign branches and foreign controlled or affiliate companies (as legally defined) shall be considered individually for tax purposes. Tax consolidation of results is allowed only for branches based in the same country. Losses accrued abroad cannot be offset against profits accrued in Brazil.