I apologise for the excitement of the title. It is not often that I use an exclamation mark when I write about legal changes. Let me explain the reasons for my enthusiasm. As you may be aware, Brazil is not a common law jurisdiction, so equity and trusts do not exist as legal concepts – not in their original form, anyway. They have been imported into Brazil in piecemeal fashion: for instance, fiduciary duties that apply to directors of Brazilian corporations and security interests (liens) that apply over certain personal and real property. Yet, Brazil’s Congress never imported the concept of ..read more

Despite the complexities of Brazil’s taxation system, the taxation of international loans to Brazilian entities is straightforward. In short, unless a specific exemption applies (such as under a double taxation agreement), lenders must pay 15% income tax on the interest payable on the loan (if the lender is based in a tax haven, then the rate is increased to 25%). The income tax payable by the lenders must be withheld by the borrower at the source at the time of payment, offsetting or other types of compensation. For those countries that adopt reciprocity principles, the income tax withheld a ..read more

Brazil has a sophisticated tax system. This makes structuring a transaction to minimise taxes a complicated task. Brazilian tax rules treat as “tax favoured or with privileged tax regimes” those countries or dependencies that: do not tax income or that tax at a rate lower than 20%; or do not grant access to information relating to the shareholding of legal entities. Note that the definitions above do not apply for transfer pricing purposes. The rules relating to transfer pricing have their own definition of “privileged tax regimes”. As part of Brazil’s fiscal controls, the Federal Revenue ..read more

On 15 June 2023, Law 14,596/2023 was published (the “TP Law”). The TP Law converted Provisional Measure 1,152/2022 into Law, making Brazil’s transfer pricing rules consistent with the OECD Transfer Pricing Guidelines. The rules will come into force on 1 January 2024, but taxpayers have already been allowed to elect to apply the new principles from 1 January 2023. The TP Law: implements the arm’s length principle (replacing the fixed margin regime); creates specific rules relating to supplies of intragroup (intercompany) services and assets, cost contribution agreements, corporate restructure ..read more

Brazil has a sophisticated tax system. This makes structuring a transaction to minimise taxes a complicated task. Brazilian tax rules treat as “tax favoured or with privileged tax regimes” those countries or dependencies that: do not tax income or that tax at a rate lower than 20%; or do not grant access to information relating to the shareholding of legal entities. As part of Brazil’s fiscal controls, the Federal Revenue Department is tasked with preparing a list of those jurisdictions and special tax regimes that in its opinion meet the requirements above. The list binds the Federal Rev ..read more

One of the key difficulties that foreign suppliers have when competing against Brazilian companies is the tax incentives granted to their Brazilian competitors. The availability of these incentives has been the subject of many diplomatic battles and WTO arbitrations. Very large players looking to enter the Brazilian market are often able to obtain tax incentives themselves. However, smaller suppliers often struggle, as qualifying for the incentives may be too difficult, expensive and time consuming to commit to the market. Until now, even ascertaining which competitors received incentives req ..read more

If you are looking to set up a company (a subsidiary) instead of registering a branch, click here. By Fabiano Deffenti and Vanessa Ribeiro Borges Registering the branch of a foreign company in Brazil has become a lot easier since the coming into force of Normative Instruction DREI 77/2020. Before then, a Presidential Decree was required – yes, the President himself or herself had to sign a Decree approving it! Now the Ministry of Development, Industry Commerce and Services is responsible for assessing applications and approval can be obtained within several days. The application is done elect ..read more

If you are looking to set up a company (a subsidiary) instead of registering a branch, click here. By Fabiano Deffenti and Vanessa Ribeiro Borges Registering the branch of a foreign company in Brazil has become a lot easier since the coming into force of Normative Instruction DREI 77/2020. Before then, a Presidential Decree was required – yes, the President himself or herself had to sign a Decree approving it! Thankfully, under the new provisions, the Ministry of Economy is responsible for assessing applications and approval can be obtained within several days. The application is done electro ..read more

On 30 December 2022, the INPI’s minutes of the meeting held on 28 December 2022 were published. The minutes provide that there can be licensing of unregistered proprietary information (“know how” and “technology”) and “any other IP assets”. Additionally, the INPI concluded that royalties can be paid for licensing the use of unregistered intellectual property rights. These includes rights over filed but not yet registered trademarks (which was already accepted by the INPI), patents and industrial designs, as well as other intellectual property rights. The new position allows for registration o ..read more

On 29 December 2022, Law 14,514/2022 came into force. The new Law takes away full control of uranium mining from the state-owned company Indústrias Nucleares do Brasil (“INB”). Although both mining exploration and extraction of minerals in Brazil by private companies has been permitted for decades, uranium mining has always been excluded, as the monopoly is enshrined in Brazil’s Federal Constitution. Under the new Law, INB maintains the monopoly over “nuclear minerals and their concentrates, associates and derivatives” yet it can delegate the following activities to private companies: the re ..read more