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Tax Overview
Transfer Pricing
Provides for Minimum rev- enue and/or maximum deductibility for import
and export transactions for goods, sales and rights be- tween related parties, parties located in low tax jurisdiction or subject to privileged tax regimes.
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Thin Capitalization
Provides for maximum debt/ equity ratio for loan interest deductibility for transactions between related parties, par- ties located in low tax juris- diction or subject to privi- leged tax regimes.
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Substance Requirements
Provides for deductibility requirements for payment, credit or remittances to enti- ties, directly or indirectly, lo- cated in low tax jurisdiction or privileged tax regimes: identification of the benefi- cial ownership, evidence of the operational capacity and documental evidence of the receipt of goods and rights and utilization of the services.
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Controlled Foreign Compa- nies (“CFC”) Rules
Brazilian CFC rules require the profits or losses recog- nition at the year-end, re- gardless of its effective dis- tribution, for controlled and related companies abroad. For companies located in low tax jurisdictions or subject to privileged tax regimes, such profits and losses cannot be recognized consolidated with other group companies.
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