Brazilian Federal Revenue regulates tax returns relative to the exchange of tax information among countries
In view of a new fiscal paradigm prevailing on the global scenario, that aims at combating international tax fraud, currency evasion and money laundering, at the end of 2016 Brazil adopted important steps towards International compliance, through 3 new Normative Rulings (IN) from the Federal Revenue of Brazil (RFB).
a) IN nº 1.684, of December 29, 2016
Since June 1st, 2016, pursuant to IN nº 1.634, foreign companies that hold equity ownership in Brazil are already under the obligation to indicate to the RFB “persons authorized to represent them as well as the chain of corporate equity participation up to individuals characterized as ultimate beneficiaries”.
Pursuant to IN nº 1.684, of December 29, 2016 (to be effective as of 12.30. 2016), a deadline was set for companies that wish to regularize their status definitively, that is:
- for companies already enrolled with the CNPJ (National Enrollment of Legal Entities), or that will enroll by July 1st, 2017, the final date for regularization is December 31, 2018; or
- for companies that will enroll as of July 1st, 2017, the need to provide information on the ultimate beneficiary and to deliver pertinent documentation will be mandatory already at the time of enrollment.
b) IN nº 1.680, of December 28, 2016]
On December 28, 2016 IN nº 1.680 was also published, based on the Multilateral Agreement of Competent Authorities of the Common Reporting Standard, that obligates Brazilian financial institutions to identify financial accounts of their clients, relative to operations that took place as of January 1st, 2017, pursuant to the Common Reporting Standard – CRS, through a return sent to the RFB called e-Financeira (e-Financial), that may be subject to automatic exchange of information between countries.
c) IN nº 1.681, of December 28, 2016
Last, but not least, IN nº 1.681, of December 28, 2016 was published, to be effective as of 12.29.2016, providing for the mandatory annual delivery of the Declaration Country-to-Country.
The Declaration Country-to-Country shall be annual, the first fiscal year begins in January 2016 and shall only be provided by a member entity, a tax resident of Brazil that controls a multinational group, whose consolidated revenues are higher than R$ 2,26 billion (equivalent, at the exchange rate in January, 2017 to approximately $810 million) in the year immediately preceding the return.
The information that is intended to be obtained is exactly the information that affects tax and financial aspects of the multinational, such as the amounts of total revenue and those obtained from related and unrelated parties, profit or loss before the Federal Income Tax, the amount of FederalIncome Tax paid and due, corporate capital, accumulated profits, number of employees, workers and other collaborators, tangible assets other than cash and cash equivalent, besides the identification of each member of the group.
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ROSMAN, SOUZA LEÃO, FRANCO E ADVOGADOS is a traditional law firm founded in 1964 by José Luiz Bulhões Pedreira (1925-2006) and Antonio Fernando de Bulhões Carvalho (1925-2009) under the name of “Bulhões Pedreira, Bulhões Carvalho e Advogados Associados”. Since its founding, it has practiced actively in multiple areas of the law, with a particular focus on corporate and tax law, as well as providing legal advice to national and international companies, other law firms and government agencies, predominantly in the area of Corporate and Income Tax law. Other significant areas of practice are commercial, administrative, financial and banking law.
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Operating in the principal areas of the law, both in providing legal advice and in litigation, that include corporate, bankruptcy and corporate reorganization, consulting and litigation in civil law, tax, insurance and reinsurance, mediation and arbitration, capital markets, M&A, contracts, real estate, administrative law, intellectual property, the establishment of foreign companies in Brazil, registration of foreign capital before the Central Bank of Brazil, labor law through an associated law firm, the professionals of the firm help clients navigate the complex legal and regulatory universe of Brazil with its own peculiarities but increasingly integrated into the international business community.
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Our attorneys have experience accumulated over many decades in the various areas of the law in which they practice and operate and in the business sectors in which our clients are involved. They also are committed to the continuous improvement of their skills, which distinguishes them in the community in which they operate, enabling each professional to render services of the highest possible standards to their clients promptly, sensitive to the clients’ needs.
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