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Brazil: Brazil introduces regularisation programme for certain assets held abroad

Pereira
Barreto

Alvaro Pereira

Gileno Barreto

On January 14, Law n. 13.254/2016 was published establishing the Special Regime of Taxation and Foreign Currency Regularisation (RERCT).

The RERCT allows individuals and legal entities domiciled in Brazil to regularise their financial resources, assets or rights of lawful origin, located outside the Brazilian territory on December 31 2014 or in earlier periods and which have not been declared or which have been incorrectly declared to the tax authorities.

Taxpayers interested in regularising their tax situation should submit to the Federal Tax Service (RFB) their declaration (with a copy to the Brazil Central Bank – BACEN) containing the list of resources, assets and rights, whose values declared should be converted into Brazilian Real. The deadline to submit the declaration is up to 210 days as from the Normative Ruling issued by the tax authorities.

The assets declared are subjected to income tax at the rate of 15%, as well as to payment of penalty at 15%, calculated on the asset values converted by the exchange rate of December 31 2014 (R$ 2,65/US$), resulting in a combined rate of approximately 30%. Note that the current effective tax rate, considering the exchange rate of December 31 2015, would be approximately 20%.

The regularisation grants amnesty with regard to: crimes against the tax system; money laundering; tax evasion; non-authorised entry and exit of foreign currency.

The special regularisation regime does not impose the repatriation of the taxpayer assets or currency; those may remain invested in foreign countries.

Interested parties are encouraged to evaluate the advantages of the Special Regime of Taxation and Foreign Currency Regularisation.

Alvaro Pereira (alvaro.pereira@br.pwc.com) and Gileno Barreto (g.barreto@lpadv.com.br)

PwC Brazil

Tel: +55 11 3674 2276 and +55 11 3879 2829

Website: www.pwc.com.br

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