BRAZIL Trends and Developments Contributed by: Celso Costa, Bruna Marrara, Luiz Rosa and Clarissa Torrente, Machado Meyer Advogados
more controversial than a CIT that is solely based on the provisions of the New Brazilian TP Rules. In theory, tax authorities might contest the tax- neutral nature of the international CSA to char - acterise the remittances abroad as compensa - tion for services, once one could try to construe that the New Brazilian TP Rules would reinforce the service nature of such arrangements, as they now expressly fall under the definitions of “intra-group services” and “low value-adding intra-group services” .
In this context, tax authorities could attempt to extend the scope of application of the New Bra - zilian TP Rules by asserting them as a new gener - al legal provision explicitly defining “intra-group services” , thereby applicable to the assessment of all Brazilian taxes, namely municipal tax on services (ISS) and federal contributions on gross revenues (PIS and COFINS). This argument may gain strength from the absence of specific provi - sions in Brazilian law addressing CSAs, consid - ering it as an atypical contract under Brazilian contractual law. Due to the novelty of the New Brazilian TP Rules, the outcomes of these controversies are yet to be seen.
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