Tax Management Portfolio, Business Operations in Brazil, contains information designed to enable foreign interests to consider
the requirements and principal problems encountered in conducting
business or making investments in Brazil. To view this Portfolio, visit Tax for
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Tax Management Portfolio, Business Operations in Brazil, No. 7040, contains information designed to enable foreign interests to consider the requirements and principal problems encountered in conducting business or making investments in Brazil.
Among other subjects, the Detailed Analysis discusses the various types of business organizations in Brazil, and the taxation of corporations and individuals, both resident and nonresident, in particular, the transfer pricing rules and the various measures for the avoidance of double taxation.
The Worksheets in this Portfolio include a list of the double taxation agreements and other tax-related agreements signed by Brazil. An excerpted tax return form for corporations is also included.
This Portfolio may be cited as Utumi and Carvalho, 7040 T.M., Business Operations in Brazil.
Ana Cláudia Akie Utumi, Esq.
Ana Cláudia Akie Utumi, Founding Partner, Utumi Advogados, São Paulo, Brazil; Director of Brazilian Branch of IFA (International Fiscal Association); Member of the IFA Permanent Scientific Committee (2010-2017); Member of the Practice Council of the NYU International Tax Program; Member of the Board of Directors of the FPSB – Financial Planning Standards Board, entity responsible for the issuance of CFP® Certification. Chair of the Brazilian Branch of STEP. Professor at FIPECAFI Accounting School; University of São Paulo (Ph.D., 2006; LL.B., 1994), Catholic University of São Paulo (LL.M., 2001), Brazilian Institute of Financial and Capital Markets (“IBMEC/SP,” MBA in Finance), Getulio Vargas Foundation School of Business Administration (BBA, 1992).
Lucas de Lima Carvalho, Esq.
Lucas de Lima Carvalho, senior associate, TozziniFreire Advogados, São Paulo, Brazil; New York University (“NYU,” LL.M. in International Taxation, 2013), Brazilian Institute of Financial and Capital Markets (“IBMEC/RJ,” LL.M. in Corporate Law, 2012), Chinese University of Hong Kong (“CUHK,” IEMBA, 2011), Getulio Vargas Foundation (“FGV,” MBA in Taxation, 2011), Federal University of Ceará (“UFC,” LL.B., 2008).
Table of Contents
Detailed Analysis I. Introduction A. The Country B. Political Organization C. Government D. Legislative Power E. Executive Power F. Judicial Power II. Operating a Business in Brazil A. Inflation, Indexing and Exchange Controls 1. Inflation and Indexing 2. Exchange Controls 3. Foreign Exchange Market B. Immigration Regulations 1. Transit Visa 2. Tourist Visa 3. Temporary Visa 4. Permanent Visa 5. Diplomatic, Official, and Courtesy Visas 6. Other Relevant Provisions C. Foreign Capital Regulations 1. Definition of Foreign Capital 2. Registration of Foreign Capital 3. Loan Regulations 4. Registration of Loans 5. Restrictions on Foreign Investment 6. Restricted Activities a. Banking b. State Monopolies c. Mineral Resources d. Newspaper and Broadcasting Companies e. Rural Property f. Transport g. Privatization h. Health Care 7. Concessions and Permissions with Respect to Public Services and Public and Private Partnerships 8. Registration of Foreign Entities and Individuals with the Tax Authorities D. Export and Import Controls 1. Import Controls a. RADAR b. Import License c. Customs Clearance (1) Import Declaration (2) Import Declaration Register (3) Check-in Channels (4) Issuance of Customs Clearance 2. Export Controls E. General Regulation of Business 1. Restrictive Trade Practices a. Interest Rates b. Trade Practice Crimes c. Antitrust Provisions (1) Mergers and Acquisitions (2) Anti-Competitive Practices d. Consumer Protection e. Payments in Foreign Currency f. Crimes Against the National Financial System 2. Securities Regulation 3. Financial Reporting F. Protection of Trade Secrets, Patents, Trademarks, and IP Agreements (Licensing Agreements and Technology Transfer Agreements) 1. Protection of Trade Secrets 2. Patents a. Patent Applications b. Patent Enforcement 3. Trademark Protection 4. IP Agreements 5. Licensing 6. Technology Transfer G. Environmental Protection H. Labor Relations 1. Definition of Employee 2. Labor Contract 3. Remuneration and Minimum Wage 4. Child Labor 5. Salary Increases 6. Working Hours 7. Vacations and Leaves of Absence 8. Duration of Individual Labor Contracts 9. Termination of Individual Labor Contracts a. Employer's Initiative (1) Termination Without Just Cause (2) Termination with Just Cause b. Employee Resignation c. Expiry of Employment Term d. Constructive Dismissal e. Termination by Agreement between Employer and Employee 10. Job Security 11. Transport Tickets 12. Unions and Strikes 13. Social Security and Pension Funds 14. Severance Pay Fund 15. Program of Social Integration 16. Health and Work Safety Programs a. Work Health Medical Control Program b. Environmental Risks Prevention Program c. Internal Commission for the Avoidance of Accidents 17. Health Hazard Allowances 18. On-the-Job Risk Allowance 19. Summary of Employer and Employee Payments/Contributions III. Forms of Doing Business in Brazil Introductory Material A. Branch of a Foreign Company B. The EIRELI C. Limited Liability Company 1. Formation of the Company 2. Articles of Association 3. Capital 4. Protection of the Corporate Name 5. Rights and Obligations of Partners 6. Management 7. Miscellaneous D. Corporation 1. Corporate Purpose 2. Corporate Name 3. Distinction Between Publicly Held and Closely Held Corporations 4. Incorporation Procedures 5. Corporate Capital 6. Securities 7. Shareholders’ Rights and Duties 8. Shareholders’ Agreements 9. Shareholders’ General Meetings 10. Corporate Management 11. Fiscal Board 12. Financial Statements 13. Distribution of Profits 14. Dissolution and Termination 15. Change in Corporate Form, Merger, Consolidation and Split-off 16. Wholly Owned Subsidiary 17. Group of Companies 18. Consortium IV. Taxation A. General B. The National Tax System 1. Federal Taxes 2. State Taxes 3. Municipal Taxes C. Tax Planning in Brazil D. Audits, Statute of Limitations, Fines, and Penalties E. Administrative Tax Procedure F. Judicial Tax Procedure V. Taxation of Domestic Corporations A. Taxes on Revenues B. Taxes on Production and on Domestic or Cross-Border Transactions 1. Excise Tax on Manufactured Goods 2. State Value-Added Tax 3. Service Tax 4. Import Tax 5. Export Tax C. Taxes on Income 1. Definition of Corporate Taxpayer 2. Corporate Income Tax and Social Contribution on Profits 3. Calculation of Taxable Base a. Actual Profit System (Lucro Real) (1) Calculation of Gross Income (a) General (b) Capital Gains (c) Foreign-Sourced Income (2) Business Expenses (a) Management Remuneration (b) Interest (c) Royalties (d) Taxes and Fines (e) Depreciation (f) Maintenance of Equipment and Plant (g) Donations (h) Losses on Receivables (i) Inventory (j) Rental/Lease Agreements (k) Salaries and Wages (l) Tax Loss Carryforward (m) Expenses or Losses Accrued Outside Brazil b. Presumed Profit System (Lucro Presumido) 4. Income Tax Withholding — Payments to Residents a. Professional Services and Commissions b. Financial Investment Income c. Undocumented Disbursements d. Dividends e. Interest on Shareholders’ Equity D. Taxes on Property 1. Tax on Rural Property 2. Tax on Urban Property 3. Tax on Ownership of Automotive Vehicles 4. Tax on Inheritances and Donations 5. Tax on Onerous Transfers of Real Property E. Taxes on Financial Transactions F. Accounting and Tax Filings 1. Bookkeeping 2. Accounting Period 3. Accounting Methods a. Investments in Other Companies b. Financial Investments c. Current and Long-Term Liabilities 4. Tax and Financial Information Filings a. Tax Returns b. Financial Information Filing VI. Taxation of Foreign Corporations Introductory Material A. Taxation of Brazilian-Source Income 1. Capital Gains 2. Dividends and Interest on Equity Paid by a Brazilian Company 3. Interest 4. Royalties and Technical Assistance (Transfer of Technology) B. Investment in the Brazilian Financial and Capital Markets 1. Ordinary Foreign Investor 2. “4,373 Investors” 3. Brazilian Private Equity Fund Investments 4. Research, Development and Innovation Financing C. Doing Business in Brazil Concept VII. Taxation of a Branch VIII. Taxation of Partnerships IX. Taxation of Resident Individuals X. Taxation of Nonresident Individuals XI. MERCOSUL (MERCOSUR) XII. Transfer Pricing Rules Introductory Material A. Related Persons B. Tax Haven Jurisdictions C. Transfer Pricing Methods D. Import Transactions — Customs Valuation and Transfer Pricing Rules 1. Customs Valuation Rules 2. Transfer Pricing Rules for Import Transactions E. Export Transactions — Transfer Pricing Rules XIII. Avoidance of Double Taxation A. Unilateral Measures B. Tax Treaties and Tax Information Exchange Agreements 1. Introduction 2. Taxes Covered by the Treaties 3. Taxation of Business Profits 4. The Mutual Agreement Procedure (MAP) 5. Relief from Double Taxation 6. Treaties and Disputes on Brazilian CFC Rules 7. TIEA with the United States and Compliance with FATCA
Table of Worksheets Worksheet 1 Electronic Corporate Income Tax Return (ECF) — Summary Worksheet 2 Federal Tax Settlement Return (DCTF) — Portuguese Language Version (Excerpt) Worksheet 3 Individual Income Tax Return (DIPF) — Portuguese Language Version (Excerpt) Worksheet 4 Corporate Withholding Income Tax Return (DIRF) — Portuguese Language Version (Excerpt) Worksheet 5 List of Countries with Which Brazil Has In Force Income Tax Treaties and Other Tax-Related Agreements as of March 1, 2018
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