Brazil introduces measures to improve fiscal transparency

Wednesday, 04 May 2016
Craig Barley TEP explains the changes recently announced by the Brazilian government to improve fiscal transparency. He points out that the publication on April 15 of Legislative Decree No 105/2016 constitutes the first step towards the enactment of the Multilateral Convention of Mutual Administrative Assistance in Tax Matters in Brazil. He also highlights draft changes to Normative Instruction No 1.470/2015 which regulates the Brazilian Corporate Taxpayer’s Registry ("CNPJ").

By Craig Barley TEP, Latour Capital Group

In the last few weeks, the government of Brazil has announced a number of regulatory measures to improve fiscal transparency.

One such development (covered in the STEP LATAM News Digest of April 19) relates to Legislative Decree No 105/2016, published by the Brazilian Congress on April 15. It approves the terms of the Multilateral Convention of Mutual Administrative Assistance in Tax Matters which aims to provide for: (i) the exchange of information, including simultaneous tax audits and participation in tax audits carried out abroad; (ii) the collection of tax credits, including precautionary measures; and (iii) document notification.

This constitutes the first step towards the enactment of the convention in Brazil – the terms and conditions of which will only be enforceable by the Brazilian tax authorities once it has been finally approved by a Presidential Decree.

The other development relates to the draft changes to Normative Instruction No 1.470/2015 (NI 1.470/2015). Among the most relevant changes to NI 1.470/2015 (drafted under Public Consultation RFB No 05/2016) are the following:

  1. Article 8 requires that ultimate beneficial owners be identified when registering entities in the Brazilian corporate tax registry ("CNPJ"), including the ultimate beneficial owners who are qualified as shareholders/unit holders of funds (Paragraph 5). An exception is made for non-profit charitable entities and publicly held corporations;
  2. The integration of the SEC and Central Bank registers with the Brazilian corporate tax registry; and
  3. The introduction of the need for those foreign entities bearing a Legal Entity Identifier (LEI) within their respective jurisdictions to provide it to the Brazilian corporate tax registry, so that it may be recorded in the local Tax Registry Status Certificate (Pt: Comprovante de Inscrição e de Situação Cadastral).

According to the Brazilian tax authorities the proposed changes to the corporate tax registry procedures are aimed at improving the country’s anti-money laundering standards and enhancing the safety with which international cross-border financial transactions are carried out. It is expected that the normative changes become effective within the next few weeks.


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