BRAZIL Law and Practice Contributed by: Ricardo Barretto Ferreira da Silva and Camila Sabino Del Sasso, Azevedo Sette Advogados
rate of 15% on the profits of large multinational companies. The new rule applies to multina - tionals with annual turnover of EUR750 million (around BRL4.3 billion) or more in at least two of the four tax years immediately preceding the tax year being analysed. The Brazilian Federal Revenue Service will be responsible for proposing and applying the nec - essary regulations that will define the essential rules for the implementation of the law, through normative acts. These acts will be based on international reference documents, such as the Model GloBE Rules and the Agreed Administra - tive Guidance. They will also include other rules and procedures approved by the OECD Inclusive Framework, which co-ordinates the application of minimum effective taxation at a global level. 5.3 Available Tax Credits/Incentives Tax incentives, also known as tax benefits, are designed to stimulate specific economic activi - ties and are granted to Brazilian companies. Therefore, in the event that a foreign investor incorporates a subsidiary or a branch in Bra - zil, there will be no difference in the tax benefit granted to a foreign or local investor. There are two types of tax incentives, as follows. • Regional – this type of incentive aims to attract and maintain companies in underde - veloped regions in order to help local growth and employability. • Social – this is the most common type of tax incentive, but only valid for companies opting for the taxable profit system. Organisations invest in actions to encourage sport, culture, innovation, and scientific research in order to receive tax rebates or exemptions. The logic is that the amount saved by the legal entity is applied to social development, with the
advantage of being able to link the mark to the supported projects. The current main incentives are: • REPETRO – a special customs regime for the export and import of goods used in the exploration and production of petroleum and natural gas, providing for the suspension of import duty, the federal excise tax, PIS- import, COFINS-import, and freight surcharge for merchant marine vessels. • inclusion in the Manaus Free Trade Zone ( Zona Franca de Manaus , or ZFM), which offers tax benefits, including a 75% reduction in income tax and exemption from PIS and COFINS contributions on imports; and • a simplified tax regime for small businesses and presumed credit to purchasers of rural products from small rural producers. The above-mentioned tax incentives have been maintained in the form of the current tax regime. But as part of Brazil’s ongoing tax reform, adjust - ments to other existing tax incentives are antici - pated, including the following changes: • IBS and CBS rates reductions of 60% will apply to key sectors, such as education, healthcare, medicine, agricultural, fishing, forestry, and extractive industries, agricultural inputs, food, hygiene products, and cultural activities; • tax exemption will be granted for transporta - tion services, medical and accessibility devic - es, medicine, vegetables, fruits and eggs, and integrated producer operations; and • CBS exemption will be applied to the Bra - zilian public policy towards higher educa - tion, Programa Universidade Para Todos (Prouni),and services covered by the Emer - gency Programme for the Events Sectors
72
CHAMBERS.COM
Powered by FlippingBook