Brazilian Revenue Department simplifies Rules for Offsetting Income Tax Paid Abroad and Modifies the List of Low Tax Jurisdictions and Privileged Tax Regimes
On 26 December 2017, the Brazilian Revenue Department published Normative Rulings No. 1,772 and No. 1,773, modifying the procedures for offsetting income tax paid abroad against corporate income tax due in Brazil, as well as the list of low tax jurisdictions and privileged tax regimes, respectively.
(i) Offsetting of tax paid abroad
I N RFB No. 1,772 amended Normative Rulings RFB No. 1,520/2014 and SRF No 213/2002. It authorized that the process of recognition of the proof of payment of the income tax paid abroad, for which validation by the Consulate of the Brazilian Embassy was previously required, may be replaced by the Apostille provided by Articles 3 to 6 of the "Convention on the Elimination of the Requirement of Legalization of Foreign Public Documents", enacted by Decree No. 8,660, of 29 January 2016. This authorization is valid with respect to income tax paid abroad by foreign controlled or associated companies of a Brazilian legal entity, as well as income tax paid over income and capital gains derived abroad.
(ii) Low tax jurisdictions and privileged tax regimes
I N RFB No. 1,773, on its turn, introduced changes to Normative Ruling RFB No. 1,037. The Republic of Costa Rica, Madeira Island and Singapore were removed from the list of low tax jurisdictions. On the other hand, new privileged tax regimes have been added: the Free Trade Zone of the Republic of Costa Rica, the regime of the International Business Center of Madeira set out in Portuguese legislation, as well as several regimes existing under the Singapore legislation.