International Tax Review is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Brazil: Brazil issues new interpretative law on taxes covered under double tax treaties

Pereira-Alvaro
Gottberg-Ruben

Álvaro Pereira

Ruben Gottberg

According to the recently enacted Law 13.202/15, the social contribution on net income (CSLL, by its Portuguese acronym) falls under the scope of Brazilian double tax treaties (DTTs).

By way of background, the CSLL was introduced in the Brazilian legislation in 1989 as a contribution to finance social security, calculated upon the net accounting income after adjustments. Although it was formally conceived as a contribution, its calculation basis is quite similar to the one used by the Brazilian corporate income tax (IRPJ, by its Portuguese acronym).

With regard to tax treaty policy, the CSLL has been intermittently and randomly included in the DTTs signed by Brazil, resulting in different interpretations of the taxes covered by the treaties. In this regard, the Brazilian tax authorities and administrative courts have upheld different arguments to limit the application of the DTTs when the CSLL is not expressly mentioned, including: no express inclusion of the CSLL under DTTs signed after 1988; and no reference to 'contributions' in the scope of the DTTs, but rather to 'taxes'.

After a long dispute between taxpayers and tax authorities, the new Law 13.202/15 states that the scope of the DTTs should be interpreted as including CSLL. This change, which will apply retroactively, may have positive impacts mainly on Brazilian companies with outbound investments and activities. Such change is also applicable to treaties signed by Brazil in order to avoid double taxation on profits derived from international air and shipping transport.

Multinationals are encouraged to analyse how the inclusion of CSLL in the scope of DTTs will impact their specific structures.

Álvaro Pereira (alvaro.pereira@br.pwc.com) and Ruben Gottberg (ruben.gottberg@br.pwc.com)

PwC

Website: www.pwc.com.br

more across site & bottom lb ros

More from across our site

The controversial measure is being watered down after criticism from the European Central Bank.
More than 600 such requests were made in 2022, while HMRC has also bolstered its fraud service, it has been revealed.
The General Court reverses its position taken four years ago, while the UN discusses tax policy in New York.
Discussion on amount B under the first part of the OECD's two-pronged approach to international tax reform is far from over, if the latest consultation is anything go by.
Pillar two might be top of mind for many multinational companies, but the huge variations between countries’ readiness means getting ahead of the game now, argues Russell Gammon, chief solutions officer at Tax Systems.
ITR’s latest quarterly PDF is going live today, leading on the looming battle between the UN and the OECD for dominance in global tax policy.
Company tax changes are central to the German government’s plan to revive the economy, but sources say they miss the mark. Ralph Cunningham reports.
The winners of the ITR Americas Tax Awards have been announced for 2023!
There is a ‘huge demand’ for tax services in the Middle East, says new Clyde & Co partner Rachel Fox in an interview with ITR.
The ECB warns the tax could leave banks with weaker capital levels, while the UAE publishes guidance on its new corporate tax regime.