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Julio Oliveira |
Ruben Gottberg |
On November 17 2015, the Brazilian Congress approved the project for conversion into law of the Provisional Measure 685/2015 (PM 685/2015), without the articles intended to impose an obligation to disclose tax planning transactions.
PM 685/2015 was released by the Brazilian government on July 21 2015 and introduced, among other provisions, rules concerning the disclosure of certain transactions to the Brazilian Internal Federal Revenue Service (RFB).
In Brazil, a PM is a temporary executive order issued by the executive branch of the government. A PM has the authority of law, but it requires formal conversion into law by the Congress within a 60-day term. If Congress does not act within this initial term, then the measure expires unless extended for an additional 60-day term (such extension can only occur once). On September 9 2015, the Brazilian Congress extended the PM 685/2015 for an additional 60-day term (no further extensions are now permitted).
During the legislative process for converting PM 685/2015 into law, the legislators considered imposing an obligation to disclose tax planning operations resulting in suppression or reduction of taxes.
After extensive discussions involving the legality of tax planning in Brazil and the extension of RFB's powers, which is evidenced by repetitive moving back and forth between the upper and the lower chambers of the Congress, the law project was approved on November 17 2015. Interestingly, the final draft was approved without the articles intended to impose an obligation to disclose tax planning transactions.
The newly converted law will now be submitted for Presidential assent, which may only veto or approve it, without the possibility to reintroduce the provisions excluded by the Congress.
Julio Oliveira (julio.oliveira@br.pwc.com) and Ruben Gottberg (ruben.gottberg@br.pwc.com)
PwC
Tel: +55 11 3674 2276
Website: www.pwc.com.br
