The Challenges of BEPS in Brazil

The implementation of BEPS - Global Erosion and Profit Shifting in addition to its main objective, which is to avoid the erosion of the taxable base, to combat the diversion of profits and to prevent the maintenance of artificial entities and aims emphatically Map the allocation of resources uncontrolled and that may eventually be made available to "terrorism."

Among the 15 actions brought by BEPS, many of them will have a significant impact on certain segments and operations, such as:

  • Fiscal challenges of the digital economy;
  • Limitation of interest compensation and other financial compensation through related parties;
  • Alignment of transfer pricing rules; and
  • Non-characterization of permanent establishment.

More than 100 countries / jurisdictions have been collaborating with the Organization for Economic Cooperation and Development - OECD in this project and although Brazil is not a member of this entity, it is part of the G20, which corroborates with the possibility of absorbing many of the rules that Are being established.

One of the first signs of this obligatoriness of the taxpayers in Brazil, was through Normative Instruction no. 1681 published on December 29, 2016 by the Brazilian Internal Revenue Service, which deals with the Country-by-Country Statement and which will require the provision of information regarding the consolidated revenue of multinational groups.

Such information shall be mandatory in the ECF for the year 2017 on an annual basis, with reference to calendar year 2016, requiring the declaration if the entity is controlled, substitute or if it is not included in the hypotheses of obligation of the Declaration, Considering also its jurisdiction.

Due to the relevance of the theme for multinationals operating in Brazil, BEPS will probably be a determining factor for strategic and operational decision making in the coming years, due to its impact on the transactions brought by the standard.

If you are interested in knowing more about the impacts of this project, please contact us.