BRAZIL Law and Practice Contributed by: Paulo Honório de Castro Júnior and Bruno Marques Feitosa, William Freire - Advogados Associados
These measures form part of Brazil’s broader anti- avoidance framework aimed at discouraging profit shifting to low-tax environments. 5.4 Reporting Obligations and Disclosure Regimes General Reporting Framework Brazil imposes extensive reporting and book-keeping obligations designed to enable the tax authorities to identify fraud, evasion and aggressive tax planning. The system is highly digitalised and operates through integrated electronic filings submitted to the RFB, as well as to state and municipal authorities. Corporate Tax Reporting Companies subject to the actual profit method must file the Tax Accounting Ledger Filing ( Escrituração Contábil Fiscal – ECF) annually. The ECF contains detailed accounting data, tax adjustments, transfer pricing information and country-by-country reporting data (where applicable). Multinational groups meeting the revenue threshold must also submit country-by-country reports (CbCRs), allowing the RFB to assess profit allocation and risk indicators across jurisdictions. Transaction and Accounting Reporting Brazilian entities must maintain and transmit electron - ic accounting records under the Public Digital Book - keeping System ( Sistema Público de Escrituração Digital – SPED). This includes: • electronic accounting books; • digital VAT-type tax records (ICMS/IPI, PIS/Cofins, IBS and CBS); and • electronic invoices ( nota fiscal eletrônica – NF-e), which allow real-time cross-checking of transac - tions. These systems enable automated data matching and anomaly detection. Financial and Cross-Border Reporting Additional obligations include: • registration of foreign investments and intercom - pany loans with the Central Bank;
• reporting of foreign assets by residents – Declara - tion of Brazilian capital held abroad ( Declaração de Capitais Brasileiros no Exterior – CBE); and • identification of ultimate beneficial owners in cor - porate registries. Financial institutions must comply with the CRS, ena - bling automatic exchange of financial account infor - mation with other jurisdictions. Absence of Mandatory Disclosure Regime Brazil does not currently operate a mandatory dis - closure regime for aggressive tax arrangements simi - lar to BEPS Action 12 or Directive on Administrative Cooperation 6 (DAC6). However, the breadth of digital reporting and cross-border transparency mechanisms provides the tax authorities with significant tools to detect abusive structures. 5.5 Role of Tax Authorities and Enforcement Measures Brazilian tax authorities are vested with broad inves - tigative powers to verify compliance and detect tax fraud, grounded in the Constitution and the CTN. These powers must observe due process and propor - tionality, but they allow extensive access to taxpayer information. Access to Books and Records Tax authorities may: • examine accounting books, tax records and sup - porting documentation; • require electronic files and digital bookkeeping systems (SPED); and • request contracts, invoices and bank documenta - tion relevant to tax liabilities. Taxpayers are legally required to maintain proper accounting records and make them available upon request. Audits and Inspections Tax audits may be initiated without prior judicial authorisation. Authorities may conduct on-site inspec - tions at business premises during regular working hours to verify operations and documentation.
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