A Glance At The Recent Changes In Brazilian Tax Reporting Obligations

By Author: martin well
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Brazilian Tax authorities recently announced new reporting obligations for Brazil residents entering into certain transactions with non-residents. Effective June 29, 2012, certain information must be provided to Brazilian Tax authorities on transactions with non-resident persons and which involve services, transfer or acquisition of intangibles and any other transaction that impacts the capital of the parties involved.

The above reporting obligation is mandatory for all individuals and/or legal bodies that are Brazil residents and follow the below listed criteria:

• Provide or contract services.
• Lawfully dispose or and obtain intangibles, which also include intellectual property rights.
• Stand for unincorporated entities that carry out transactions that may modify their capital worth.

In addition, the above reporting obligations are also applicable to Public Administration agencies and departments, resident individuals and legal bodies carrying out the above listed transactions through a foreign branch. For the above reporting purposes, a resident includes a Brazilian subsidiary, a foreign ...
... subsidiary or a Branch of a Brazilian company.

The information must be provided by either the Brazil tax resident or by its representative via web-based portal access, which will be provided by the Brazilian tax authorities.
An appendix to the Normative Ruling 1,277, published in the Official Gazette of 29 June 2012, sets out the categories of services and intangibles that must be reported by the Brazil tax residents.

Brazilian Tax Reporting: Penalties for non compliance:

Delays or failures in providing the required information may attract:
• A fine of BRL 5,000 every month
• A penalty of 5 percent of the value of the transaction where the information is:-
• Not provided, or
• Inaccurate, or
• Incomplete.

Brazilian Tax Reporting: Exemptions
Transactions with non residents that involve procurement and sale of goods (involving services and intangibles embedded in them), if they are registered with the Integrated Foreign Trade System - Sistema Integrado de Comércio Exterior (SISCOMEX).

Transactions carried out via:-

• Legal bodies which are subject to the Unified System for tax payment and contributions by small entities.
• An individual micro entrepreneur.
• Individuals who do not carry out any economic activity in their names with regard to the sale of goods and services where monthly transaction value does not exceed US$ 20,000.

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