On May 30 2003 Law 10,684 introducing modifications to the tax instalment programme for Brazilian taxpayers was enacted. The general rules set forth in Law 10,684 can be summarized as follows.
Brazilian taxpayers will have the option to pay their tax liabilities (in arrears) with the federal tax authorities divided in up to 180 monthly payments. The monthly payments will be subject to the Brazilian long-term interest rate.
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The monthly tax payment may not be inferior to (subject to certain exceptions):
1.5% of the taxpayer's monthly gross income for the month prior to the payment; or
R$2,000 ($700) - for legal entities.
The main federal taxes included in the tax instalment programme are as follows:
corporate income tax (IRPJ);
social contribution on net income (CSLL);
contribution to the employees' profit participation programme (PIS);
tax for social security financing (COFINS);
excise tax (IPI); and
import tax (II).
Brazilian taxpayers will have up to the last working day of July 2003 to enter into the new programme and federal tax liabilities of up to February 28 2003 would be included in the tax instalment programme.
Tax identification numbers
As with Normative Instruction 200, non-resident companies owning goods and rights in Brazil, subject to public registration, are obliged to apply for and obtain a federal taxpayer identification number - known as the Cadastro Nacional da Pessoa Jurídica (CNPJ). The mentioned assets include:
real property;
vessels;
equity investment in Brazilian companies;
investment in the financial market;
vehicles;
aircraft;
bank accounts; and
investment in the capital market.
The regulations expressly mentioned that ownership of intellectual properties (such as trademarks and patents) would not require the non-resident entity to obtain a federal taxpayer identification number.
On May 5 2003, Normative Instruction 312 (NI 312) was enacted, providing further details and clarification about the new requirements for legal foreign entities domiciled outside Brazil to obtain a taxpayer identification number. The general rules set forth in NI 312 can be summarized as follows:
for depository receipts issued abroad, which are guaranteed based on the value of securities with specific custody in Brazil, the foreign investors are no longer subject to registration with the tax authorities; and
foreign investors will have, from now on, 180 days after the funds entered the country to obtain the tax identification number (initially, the foreign investors had to obtain the tax identification number prior to the entry of funds into the country).
Nélio B Weiss (nelio.weiss@br.pwc.com) and Philippe Jeffrey (philippe.jeffrey@br.pwc.com), São Paulo
