7 latin american tax update webinar focus – brazil …7th annual latin american tax update webinar...

7TH LATIN AMERICAN TAX UPDATE WEBINARFOCUS – BRAZIL TAX REFORM

*This presentation is offered for informational purposes only, and the content should not be construed as legal advice on any matter.

7TH LATIN AMERICAN TAX UPDATE WEBINAR

AGENDA

Regional update

Regional and tax trends

Argentina/Tax audit regulations

Chile/P. Bachelet’s proposed tax reform package

Colombia/tax regulations of the 2012 tax reform package

Mexico

2014’s tax reform package: regulations issued to date and additional key industry provisions

Tax audit scenario

Brazil

Tax legislative update/Law 12,973, 2014

Adoption of IFRS standards for income tax

Restrictions on amortization of goodwill

Changes to the CFC regime

Reopening of tax amnesty programs

Tax litigation update

Advantages for companies that litigate on taxes in Brazil: what you need to know

CFC rules: Vale case decision and implications in light of Law 12,973, 2014

Application of Article 7 under DTT

Q&A

June 2014 2

Presenters

June, 2014 3

Alex JorgeTax Partner*

Campos Mello Advogados, São Paulo, [email protected]

(55-11) -3077-3500

Manuel RajunovCo-Managing Partner

DLA Piper, Mexico [email protected]

(214) 743-4550

John GuarinLatin American Project Manager

DLA Piper, New [email protected]

(212)776.3877

Ana Luiza MartinsTax Litigation Partner*

Campos Mello Advogados, São Paulo, [email protected]

(55-11) -3077-3500

**Alex Jorge and Ana Luiza Martinz are partners in the Tax Practice of Campos Mello Advogados, an independent Brazilian law firm.

mailto:[email protected]




7TH LATIN AMERICAN TAX UPDATE WEBINARREGIONAL UPDATE

John Guarin – Latin American Project ManagerInternational Tx Practice, DLA Piper, New York


Regional update - trends

Regional trends

Growth rates / increase in individuals tax base

Social demand for additional/better programs

Political swing towards the left / larger governments andcorresponding additional funding requirements

Revenue increase via:

Rate increase

Additional taxes

Incorporation of CFC provisions (as capital exporters)

Audit strengthening

Denouncing/renegotiating abusive tax treaties

Expropriation of key target companies

June 2014 5

Regional update - tax trends

Tax regional trends

Hefty audits on cross border transactions

Proper documentation

Proper WHT

Tax residency certificate +

Expense relationship with generation of taxable income

Operating substance of payment recipient

BEPs effects / tax substance of payment recipient

“Triangular” transactions

Tax amnesties

Electronic tax audit surveillance

CFC provisions

June 2014 6

Regional update - Argentina

Argentina:

2013 tax reform

Capital gains tax at 15% on net gain or 90% of gross

Dividend WHT tax at 10% (+35% equalization)

Extended application of 0.6% bank credit/debit tax thru end of 2015

2014 audit/regulations

Triangular transaction penalty

Invoice destination v. delivery destination

0.5% WHT (2% if invoice destination is not in the white list)

Blocks speedy VAT recovery opportunities to exporters

Registry affiliated parties (within 10 days from incorporation/dissolution)

Deadline April/July 1

Whitewash bill/tax amnesty

Extension to 06/30/2014 (federal tax only)

June 2014 7

Regional update - Chile

Chile/P. Bachelet’s proposed tax reform package (highlights)

CIT 1st level rate increases from 20% to 25%

2014: 21%; 2015: 22.5%; 2016: 24%; and 2017: 25%

Shareholders liability switches from cash to accrual basis FY2017

No deferral of 2nd level rate tax of 35% (1st level rate is still creditable)

Profits are deemed distributed in year of generation

WHT does not apply if all shareholders are individuals resident in Chile

but… Since ChileCo must pay WHT upfront, cash flow speaking, the CITburden seems to be really going up to 35%

Capitalization of interest on shares acquisitions ChileHoldCo/ChileOpco structure/ i’s will be no longer deductible as an

expense)

June 2014 8

Latin America tax update - Chile

Chile/P. Bachelet’s proposed tax reform package (highlights) Contd.

Thin Cap

As of FY2015

3:1 ratio or if financial expenses exceed 50% of net taxable income

Debt includes interest and any other expense related thereto

Capital gains

For non-residents will be taxed at 35% in all instances (currently at 20%providing certain requirements are met)

CFC provisions

FY2015 in respect of passive income (dividend, withdrawal of profits, interest,capital gains and royalties) and tax haven income

June 2014 9


Chile/P. Bachelet’s proposed tax reform package (highlights) Contd.

GAAR provisions

Re-characterization authority if legal form is abused

Abuse includes: avoidance, reduction or deferral

Electronic audit provisions

Access to electronic files of the taxpayer

Access to taxpayers’ financial institutions (credit and debit card payments)

Tax consultants penalties

Transfer pricing tax penalty on disallowed expenses and TPadjustments goes from 35% to 40% FY2017

June 2014 10


Chile/ P. Bachelet’s proposed tax reform package/Contd.

Other taxes

VAT on real estate transactions

Carbon Tax (Annual tax) CH$0.1 to CH$5 per ton emitted FY2016

Stamp duty increase from 0.033% and 0.4% to 0.66% and 0.8%

Chile/US tax treaty (02.04.2010)

Next to go to the Senate Floor

June 2014 11

Latin America tax update - Colombia

Colombia

December 26, 2012 tax reform included:

CIT (33to 25%) and KG (33 to 10%) rate reductions

Introduction of:

Social contribution surtax “CREE” (FY2014 to 2016: 9% and 8% thereafter)

Permanent establishment

Tax residency via effective management

Thin capitalization provisions

GAAR provisions

Restriction to tax free reorganizations

BEPS component re/ taxation on transfer of assets/risk/functions abroad

June 2014 12


Colombia/ Regulations issued in 2013 include:

Social contribution surtax – “CREE”

Applies to Colombian incorporated entities and also to Colombian PE

Tax base is in line with CIT (net taxable income and exempt income; minimumpresumptive income CIT basis (3% net equity); limit on expenses paid abroad notsubject to WHT)

Permanent Establishment

Fixed place of business refers to “space” (not premises, facilities installation)

No 6 months minimum time presence criterion

Agency follows OECD definition

Compliance requirements:

Functional analysis of PE (separate per PE or branch and kept for 5 years)

Separate Colombian F/S using Colombian GAAP (FY2015 IFRS)

25% WHT on remittance of untaxed profits

June 2014 13


Colombia/ Regulations issued in 2013 include / Contd.

Tax residency

Individuals

> 183 days within 365-day period; >50% assets held or administered inColombia; or no residency in another country; or resident in a tax haven

Mind and management

OECD criteria (key decisions, BOD meetings, senior management)

Colombian GAAP

Thin cap

Debt to equity ratio is 3:1

No definition of debt but reference to anything that generates interestpayment (conceptually may captures lease, factoring, other)

Debt is not restricted to related party debt

Does not apply to public infrastructure projects

June 2014 14


Colombia/Regulations issued in 2013 include/Contd.

BEPS provision

Taxation on transfer of assets/risk/functions abroad / FMV must be determined andsupported with dedicated TP study

Tax havens list issued, main negative tax effects:

October list to be reviewed annually

Related/unrelated party TP compliance

Fall under the scope of Colombian general anti-avoidance provisions

Overall 33% WHT on all other payments

Portfolio investment proceeds 25% v 14%

Non deductibility of payments made with no WHT

… effect on payment of imports - DIAN’s opinion on 03.20.2014 v. 05.26.2014

June 2014 15

1. Andorra

2. Angola

3. Anguilla

4. Antigua and Barbuda

5. Bahamas

6. Bahrain

7. BVI

8. Brunei

9. Cape Verde

10. Cayman Islands

11. Cook Islands

12. Cyprus

13. Dominica

14. Grenada

15. Guyana

16. Hong Kong

17. Isle of Man

18. Jersey

19. Jordan

20. Labuan

21. Lebanon

22. Liberia

11/20/2012Foreign Tax Update Webinar 16

22. Liberia

23. Lichtenstein

24. Macau

25. Maldives

26. Marshall Islands

27. Mauritius

28. Monaco

29. Nauru

30. Oman

31. Pitcairn, Henderson, Ducie andOeno Islands

32. Qeshm

33. ST Helena, Ascension andTristan da Cunha

34. Saint Kitts and Nevis

35. Saint Lucia

36. Saint Pierre and Miquelon

37. Saint Vincent and the Grenadines

38. Samoa

39. Seychelles

1. Barbados

2. Bermuda

3. Guernsey

4. Kuwait

5. Panama

6. Qatar

7. United Arab Emirates

Tax Havens List

39. Seychelles

40. Solomon Islands

41. Svalbard

42. Trinidad and Tobago

43. Vanuatu

44. Yemen


Transitory List

Negative effect onimports

Negative effect on privateequity funds structures

Colombia

Post 2014 re-election(?) reform

WHT on dividends

Reintroduction of equity tax

June 2014 17

Regional update - Colombia

7TH LATIN AMERICAN TAX UPDATE WEBINARMEXICO – 2014 TAX REFORM PACKAGE

Manuel Rajunov, Tax Partner – DLA Piper, Mexico City


Mexico 2014’s tax reform package

Mexico: 2014 tax reform

For complete coverage please check:

http://www.dlapiper.com/en/us/insights/events/2013/11/sixth-foreign-tax-update-webinarbrfocus-on-latin__/19-nov-2013--webinars/

DLA Piper Mexico: [email protected]

IETU repealed

Substance testing for deductibility of related party transactions (testthat it be part of taxable base of recipient)

Elimination of consolidation regime

Elimination of installment sale option (ability to defer 65% income)

Introduction of 10% withholding on dividends payable to individualsand foreign shareholders (should not affect US tax residents/MFN)

June 2014 19





Mexico: 2014 tax reform / Contd.

New regime for IMMEX companies imposing more stringentsubstance requirements (transformation and 70% assets tests)

Preferential VAT rates for border and tourist areas repealed andstandardized at national 16% rate

Imposition of 16% VAT on temporary importations by IMMEXcompanies unless IMMEX is certified with SAT

New excise taxes on mining activities

June 2014 20


Mexico: 2014 tax reform / Contd.

Regulations issued to date

Tax audit scenario

June 2014 21


BRAZILTAX LEGISLATIVE UPDATE

Alex Jorge*, Tax Partner – Campos Mello Advogados, São Paulo

TAX JUDICIAL UPDATEAna Luiza Martinz*, Tax Litigation Partner – Campos Mello Advogados,

São Paulo

*Alex Jorge and Ana Luiza Martinz are partners in the Tax practice of Campos Mello Advogados, an independent law firm,and are based in São Paulo

7th Annual Latin American Tax Update Webinar 23

Law 12,973 of May 13, 2014: landmark legislation

Brazil has enacted corporate tax reform, Law 12.973 of 13 May 2014 (the “New Law”),which is the broadest and deepest reform to Brazil’s corporate income tax system since theenactment of Decree-Law 1,598 of December, 26, 1977

Timeline

December 28, 2007: Law 11,638/2007– Convergence of Brazilian Accounting Rules intoInternational Financial Reporting Standards (IFRS)

December 03, 2008: Provisional Measure (MP) no. 449/08 - Enactment of a temporaryregime called Transitory Tax Regime (RTT) later converted into law on May 27, 2009

February 07, 2013: Treasury-Attorney Ruling No. 202/13: Dividends distributed in excess ofthe profits calculated by RTT Accounting are taxable

September 16, 2013: Brazilian IRS Rev. Proc. IN no. 1,397/2013 – unfavorable regulations

November 11, 2013: Provisional Measure no. 627/13 – Supersedes RTT and promotechanges to the Brazilian tax law in compliance with IFRS requirements

May 13, 2014: Conversion of MP 627 into Law 12,793/14

06.04.2014

Brazil: Adopting IFRS for income taxes

(Law 12,973)


Brazil: Adopting IFRS for income taxes

(Law 12,973) – Contd.

Law 11,638/2007: adoption of IFRS for accounting purposes only

Under IFRS Regime, some revenues, costs and expenses that were not booked under theprevious Brazilian GAAP standard as of December 31, 2007 (2007 Standard Accounting)

There are differences between the two regimes regarding assets, liabilities and profitsmeasurements and net equity items.

Under the IFRS Regime, net profits subject to dividend distribution could be higher or lowerthan the amount calculated based on 2007 Standard Accounting.

RTT Regime: neutrality regime for corporate income taxes

Created on a temporary basis until new rules to adjust the IFRS to the tax rules (corporateincome tax – IRPJ, tax on net profits – CSLL, tax on gross revenues – PIS/COFINS)

Under the RTT, any changes in the measurement of revenues, costs and expenses shouldbe neutral for purposes of determining the taxable basis of IRPJ, CSLL, PIS/COFINS

While RTT was only applicable to revenues, costs and expenses, other accounting itemssuch as assets, liabilities, profits and dividends should be calculated under the IFRS regime

Law 12,973/2014 : conversion of accounting and income taxes to IFRS (end of RTT)

RTT is superseded and IFRS is now the starting point for tax computation

Some adjustments are yet required to arrive at taxable income

06.04.2014

7th Annual Latin American Tax Update Webinar 2506.04.2014

Net Profits beforeTaxes

(2007 AccountingStandard)

(+)(-)

Adjustments(temporary and

permanentdeductions/additions)

________________

Taxable Income

Until 12.31.2007Net Profits before Taxes

(IFRS standard)(+)(-)

RTT adjustments (2007Standard)

________________Net Profits before taxes

(2007 Standard)(+)(-)

Adjustments (temporaryand permanent

deductions/additions________________

Taxable Income

“RTT”Net Profits before

Taxes (IFRS)(+)(-)

Adjustments(temporary and

permanentdeductions/additions)

______________Taxable Income

Law 12,973

D

i

v

i

d

e

n

d

s

Brazil: adopting IFRS for income taxes

(Law 12,973) – Contd.



(Law 12,973) – Contd.

New Law will be in effect as of January 1, 2015

However, companies may elect to elect the adoption of the new law as of January 2014

IRS Rev. Proc. IN no. 1,397/2013 was revoked by Law 12, 973/2014?

Earnings and dividends calculated between 2008 and 2014

Profits and dividends in excess of the amounts calculated based on the accounting criteria in force inDecember 31, 2007 (“RTT Accounting”) shall not be subject to the IRPJ and CSLL, except if election is madefor application as of 2014

Interest on own equity ("JCP") calculated Between 2008 and 2014

It was ensured that the calculation of the limits for the JCP payments between 2008 and 2014 may be basedon equity calculated under IFRS standard, even if it exceeds calculations made under the RTT Accounting

If the company elects to anticipate the end of the RTT already in 2014, it must calculate the JCP based onthe new rules, which restricted the accounts that can be used to the following:

Social capital

Capital reserves

Revenue reserves

Treasury stock and

Accumulated losses

06.04.2014



(Law 12,973) – Contd.

Net equity pick up method (MEP)

Similarly to the JCP, for calendar years of 2008 to 2014, companies may value theirinvestment in other companies based on the net assets of the affiliate or subsidiaryaccording to the IFRS standard

Exception is made for companies which elects the end of the RTT in 2014, which may notuse this evaluation method as of 2014

The net assets of branches, subsidiaries and affiliates domiciled abroad shall be calculatedbased on the standards of the relevant legislation in the country of domicile

Fair value measurement (FVM)

It was made clear that any gain arising from the FVM should also be computed intransactions involving the exchange of assets or liabilities

However, these FVM adjustments should not result in any tax impact until the disposition,sale or liquidation of the assets or liabilities occurs, as along as the taxpayer has specificcontrols in their books and records for such adjustments

Pending regulations from the tax authorities

06.04.2014


IFRS AccountingStandards

Adjustmentsmade by law

Substance prevails over form, unless the law provides adjustments


(Law 12,973) – Contd.

Substance Form


Brazil: goodwill amortization

New rules on goodwill amortization may impact future M&A tax planning structures

Definition of cost of investment (equity value)

Appraisal Report

Evaluates the surplus (or deficit) of each asset and not the profitability of the enterprise

Must be prepared by a third-party expert and filed with the Brazilian IRS or Public Registryuntil the 13th month after the reorganization

Report disregarded by tax authorities: wrongful information or relevant error

06.04.2014

Previous Definition New Rule

Equity value Equity Value

Goodwill – Asset Value

Surplus or deficitGoodwill – Other EconomicReasons (intangible)

Goodwill – Future Profitability Goodwill


Corporate income tax deductions

Pros and cons

06.04.2014


Goodwill – Asset Value:depreciation and amortization

Tangible Assets surplus ordeficit: depreciation

Goodwill – Other EconomicReasons (intangible): non-

deductible

Intangible Assets surplus ordeficit: depreciation

Goodwill – Future Profitability:deductible (60-month minimum)

Goodwill – residual: deductible(60-month minimum)


Pros: possibility to fully allocated tofuture profitability

Pros: single appraisal and intangiblegoodwill amortization

Cons: risks if there are 2 appraisalsand intangible amortization

Cons: allocation 100% to futureprofitability no longer possible

Brazil: goodwill amortization (Contd.)


Grandfathering provision: the former 2007 Accounting Standard Rule will remain in force for

reorganizations made until December 31, 2017

However, the acquisition must take place until December 31, 2014

Goodwill must be recorded by this date and supported by an appraisal report

Exception for governmental approval (i.e., antitrust): if the reorganization depends on

approval by governmental agencies or bodies, the old rules will remain in force if the

reorganization takes place until 12 months after approval

06.04.2014

Brazil: goodwill amortization (Contd.)


Brazil: changes in CFC Rules

Current rules

Controlled and affiliated companies:taxation of profits earned abroad in thedate of accrual, regardless of effectivedistribution to shareholders

06.04.2014

New rule

Affiliated companies: cash basis

Controlled companies: taxation of thevariation on the value of the investmentin controlled company (directly orindirectly owned) that is equivalent to itsprofits before income taxes, exceptforeign exchange variation.Parent

Direct CFC

IndirectCFC

Parent

Direct CFCIndirect

CFC


Brazil: changes in CFC rules

control defined

Controlling company: holds, directly or throughout other controlled companies, ownershiprights that assure, permanently, majority on social decisions and the power to elect the majorityof managers

Affiliated company: significant influence, without control. A 20% voting capital participation isdeemed an affiliation (if no control is verified)

Deemed control: company that holds more than 50% of the voting capital of an affiliatedcompany in connection with other related companies or individuals, either residents or non-residents in Brazil

Deemed affiliation: enterprises (?) jointly controlled with unrelated parties

Cash basis for affiliated companies – only if the affiliated company is not :

located in Favorable Tax Jurisdiction (FTJ) or subject to Privileged Fiscal Regime (PFR)

controlled (directly or indirectly) by legal entity located in PFR or FTJ

subject to a sub-taxation regime (STF has not analyzed such restriction)

deemed as a controlled company (STF has not analyzed such restriction)

06.04.2014



consolidation for controlled companies

General rule:

Allows offset of profits and losses of foreign companies until the year 2022

Offset of Losses: no time limitation, provided that previous losses are reported to theBrazilian IRS

Exceptions – controlled companies:

Located in FTJ, subject to RFP or sub-taxation

Controlled by companies located in FTJ, subject to RFP or sub-taxation

Located in country without agreement or treaty with clause for exchange of tax information(unless its accounting books are delivered to the Brazilian IRS electronically and thesupporting documents are made available)

That earns active income lower than 80% of total income

Active income defined as income of active business, except:

Royalties, interest, dividends, shares/stock, leasing income, capital gains (unless sale ofshares or assets acquired over 2 years), financial gains, gains on financial commissions

06.04.2014


Brazil: changes in CFC Rules

deferral of payment

Law grants an 8-year installment deferral of payment as of the year of theforeign profits are accrued, as follows:

1st year: distribution of at least 12.5% of the profits

8th year: distribution of the remaining profits

Conditions:

For the controlling (holding) company (and deemed controlled)

LIBOR interest rate for 12 months, plus US$ FX variation

Voluntary disclosure of the taxes due

For the controlled company (directly or indirectly)

Not located in FTJ, subject to RFP or sub-taxation

Not controlled (directly or indirectly) by company located in FTJ, subject to RFP or sub-taxation

Active income over 80%

06.04.2014



foreign tax credit

Offset of income tax paid abroad up to the limit of the income tax paid in Brazil

Profit consolidation = Income Tax Consolidation

Withholding income tax (WHT):

Credit for WHT withheld in Brazil and abroad

Credit for WHT outside Brazil only if the country of residence of the beneficiary of theincome allows a deduction in calculating the taxable basis of the controlled company

Deduction (in the profits of the controlled company or affiliated company) of its profitson shares of controlled or affiliated companies in Brazil

Deduction of transfer pricing adjustments and thin capitalization (excess interestexpense)

Accumulated foreign tax credits: law is silent, but current regulations allow offset of excesstax credits in following years

06.04.2014



exemption and stimulus credit

Oil and gas activities

Concessionaires, companies holding a permit, companies under the production sharingregime, holding an onerous assignment

Companies who are hired by these companies are also entitled to the benefit.

Revenues derived from time charter contracts, bareboat contracts, operating lease, rent andloans and other services directly related to oil and gas activities are excluded from taxation

Stimulus deemed credit: 9% for Income Tax until 2022

Food and beverage industries

Construction – buildings and infrastructure works

Government may increase the list of industries

06.04.2014


Brazil: CFC rules – main issues

Tax treaty supremacy over Brazilian CFC rules

The Brazilian tax authorities are likely to take the position that the New Law is only taxingthe controlled company variation on its investment in the controlled companies

The courts will need to address the new rules

Affiliated companies

A number of new rules and restrictions narrows down the definition

Consolidation issues

The new consolidation rules ignore any holding structure (i.e., vertical consolidation)

It is only applicable to a number of cases and will expire in 2022

Tax deferral

It is equivalent to an installment agreement, and only applicable to specific cases

Excessive FTC could be generated in Brazil

06.04.2014


Brazil: tax amnesty programs in effect

Deadline for installment/amnesty applications: July 31, 2014

Tax on gross revenues (PIS/COFINS) – banks, insurance companies and other

financial institutions

Taxable events until December, 31, 2013

Corporate income tax (IRPJ /CSLL) – Profits earned by CFCs

Taxable events until December, 31, 2013

Other federal taxes (REFIS)

Taxable events until December 31, 2008

Congress extended it until June 2013, but President vetoed

This will be re-included in another bill that was just approved by the Congress

06.04.2014

Brazil - tax judicial update

Advantages for companies that litigate tax in Brazil: what you need to know

Defensive litigation to be made at administrative level

Administrative Court (CARF) composed by representatives of both tax authorities andtaxpayers

History of positive administrative decisions on relevant tax disputes (e.g. premiumamortization – “Gerdau” leading case)

Administrative discussion of a debt to be made regardless of any guarantee (e.g. depositor pledge)

Administrative discussion to suspend tax credit enforceability and allow tax clearances tobe issued

Final administrative decisions favorable to taxpayers cannot be brought to the judiciary.

Proactive litigation

Brazilian government not rarely enacts illegal and/or unconstitutional laws

Taxpayers to challenge illegal/unconstitutional taxes (future and past)

Supreme Court may limit recovery of the past to ongoing lawsuits or lawsuits filed up to acertain date – prospective effects (political issue)

4006.04.2014


Brazil: CFC rules (Vale case)

Treaty Supremacy over Brazilian CFC Rules

The Brazilian Supreme Court has not yet analyzed the issue involving CFC rules

The Superior Court of Justice (STJ), on a non-binding decision (REsp 1.325.709/RJ), hasruled that:

Art. VII of OECD’s Model Convention, adopted by most of the western countries, includingBrazil (not an OECD member) conflicts with Brazilian CFC Rules

Under the Vienna Convention on the Law of Treaties, a party may not invoke the provisionsof its internal law as justification for its failure to perform a treaty (art. 27), in observance tothe principle of good faith

With regard to non-treaty countries located in FTJs (Bermuda), the court determinedimmediate taxation of undistributed profits

In the Vale Case, the DTT countries were: Belgium, Luxemburg and Denmark, all protectedagainst the “old version” of Brazilian CFC rules (MP 2.158/01)

On the other hand, the entity located in Bermuda (tax haven/ without a DTT with Brazil) wassubject to the “old version” of Brazilian CFC rules (MP 2.158/01)

Implications in light of Law 12,793/2014

New definition of foreign profits will reopen discussion at the court level

06.04.2014

Brazil - application of article 7 under

DTT

STJ has ruled favorably to the taxpayer in cases involving the supremacy ofArticle 7 of the OECD Model over domestic law

Special Appeal 1.161.467 / RS – 05.17.2012 – COPESUL Case

Germany and Canada DTTs

Brazilian Company hired foreign companies to provide services in Brazil

Article 7 “profits” are more comprehensive that “actual profits” concept

lex specialis derrogat generalis

Brazilian IRS – Ruling 1/2000 (“ADI 1/2000”)

Tax treatment for remittances abroad in consideration for technical assistanceservices without transfer of technology

General rule: subject to WHT – 25%

If the payment is remitted to treaty countries: treated as “other income” (Article 21),and subject to 25% WHT

Agreements which are not required to be filed with the Brazilian PTO are deemed tobe technical and assistance services


DLA PIPER’S


Q&A

Thank you for your participation.

June 2014 43

7 latin american tax update webinar focus – brazil …7th annual latin american tax update webinar...

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