Trust Bloomberg Tax's Premier International Tax offering for the news and guidance to navigate the complex tax treaty networks and business regulations.
By Ed Taylor
Brazil’s federal revenue service is continuing to adapt the country’s tax rules to OECD recommendations, as shown in recent guidance on how companies should seek help from the government on international tax questions.
Normative Instruction 1689, issued Feb. 21, spells out the requirements for companies to request a consultation on international taxation questions including those dealing with transfer pricing, a Brazilian program providing tax incentives for the electronics industry and the opening of foreign offices.
From now on, companies requesting clarifications on these issues will need to provide specific information regarding their operations, the Feb. 21 guidance said.
“It will be necessary for the company to identify its direct and final controller, the country of residence of its headquarters, the country of its permanent establishment and all of the related areas with which the company conducts the operations that are the object of its consultation,” attorney Geraldo Valentim of MVA Advogados told Bloomberg BNA in a Feb. 22 e-mail.
The revenue service said in a statement that the new norm is part of Brazil’s adherence to the Organization for Economic Cooperation and Development’s recommended requirements for exchanging information with other countries’ revenue services on the international operations of companies—recommendations developed under its Action Plan on Base Erosion and Profit Shifting, the organization’s two-year project to combat tax avoidance by multinational companies.
Valentim added that following the BEPS guidelines will also give Brazilian authorities a “greater cross referencing of information for internal tax monitoring purposes.”
Attorney Alexandre Siciliano of the firm Lobo & De Risso Advogados pointed out that the new norm is the second one dealing with BEPS to be released in the last two months. At the end of December, the revenue service issued its new country-by-country report format, another BEPS requirement that Brazil agreed to adopt in 2015.
The format requires companies to present a wide range of information regarding their overall operations, concentrating on revenue and taxes. It will be shared with other nations “where entities of the multinational group are present through agreements on the automatic exchange of tax information,” according to the tax department. Siciliano told Bloomberg BNA that he expects “many other norms” dealing with BEPS to be released.
Other aspects of the OECD’s BEPS project deal with ensuring that interest deductions are linked to a level of economic activity and changes to the permanent establishment definition that will address companies’ strategies to avoid having a taxable presence in a country.
Over the past year, Brazil has taken major strides towards the closing of loopholes that have allowed companies and individuals to hide undeclared income abroad. In June, the country completed its formal adherence to the Convention on Mutual Administrative Assistance in Tax Matters, which permits Brazilian tax officials to share information on bank accounts, income, investments and other tax related issues with over 90 countries that have already adhered to the convention.
This followed the country’s adherence in 2015 to the U.S. Foreign Account Tax Compliance Act for the exchange of tax information.
To contact the reporter on this story: Ed Taylor in Rio de Janeiro at email@example.com
To contact the editor responsible for this story: Molly Moses at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)