Brazilian Tax Amnesty Update
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A new report and draft of the Tax Amnesty was presented at and approved by the Special Committee from the House of Representatives/Lower House (attached) on 10.22.2015. Now, the Project has to be approved by the Plenary (General Assembly) of the House of Representatives, then by the General Assembly of the Senate and finally sanctioned by the President.
The project is an improvement from the previous versions and its main points are:
1) Voluntary disclosure (RERCT - Regime Especial de Regularização Cambial e Tributária) of transferred overseas, kept overseas or unduly repatriated unreported assets of licit origin.
2) Its applied to Brazilian residents on 12/31/2014 (and open succession procedures/heirdom on that date), owners or previous owners of said assets, even if they are not residents at the time of the approval of the regime.
3) It is not applied to individuals already definitively convicted in criminal proceedings (even if related to assets which could be regularized) or to assets whose omission of income/revenue has already been identified by the Tax Authority.
4) Undeclared assets are comprised of: amounts, corporeal or incorporeal assets, capitals and rights, regardless of their nature and denomination, including:
(i) Bank deposits, deposit certificates, financial instruments, insurance policies, investment certificates or capitalization transactions, credit card deposits, pension funds;
(ii) Loans executed with individuals or legal entities;
(iii) Amounts arising from unauthorized exchange transactions;
(iv) Amounts paid for corporation shares, capital subscription, capital contribution or any form of equity stake;
(v) Intangible assets abroad, including trademarks, copyright, software, know-how, patents and royalties
(vi) Real estate;
(vii) Movable assets subject to registration, including given in fiduciary alienation e.g. vehicles, airplanes, ships;
(viii) Foreign assets subject to an open succession procedure; and
(ix) jewelry, art works, antiquities, archeological findings, animals and their reproduction gene materials.
5) Disclosure procedure through:
(i) a Declaration (to be submitted to the Tax Authority/Receita Federal and the Central Bank) with the undeclared assets in Reais on 12/31/2014 (or, if they do not exist on that date, the description of the owned assets);
(ii) a Rectified Tax Return of the year 2014 (and any subsequent).
(iii) Records and supporting documentation should be kept for 5 years
(iv) Amnesty effects apply to assets kept in the name of a third party (who is also amnestied)
(v) Income/proceedings of the year 2015 should be included on the rectified Tax Returns (they will be taxed normally and with interests, but without fine)
6) Assets should be valued (using the official Ptax Exchange Rate of the USD on 12.31.2014):
(i) Assets listed as 4.i and iii: with a balance given by the financial institution.
(ii) Assets listed as 4.ii: with the remaining credit balance of the contract
(iii) Assets listed as 4.iv: with the "net worth" according with a 12/31/2014 balance sheet
(iv) Assets listed as 4.v, vi, vii, ix: with an technical valuation
(v) Assets listed as 4.viii: with the inheritance share
(vi) Nonexistent on 12/31/2014: with support document which describes the asset or the related transaction.
(vii) Repatriated assets: with their value on 12.31.2014
(viii) Bank accounts up to R$ 10.000,00 per owner are fine exempt
The Declaration presented to the Tax Authority cannot be used in any criminal proceeding.
Disclosure of information pertaining to the self-disclosure is punishable by law and with dismissal for public servants.
The tax will be 15% with a 15% Fine (Total 30%). For Real Estate, the fine can be paid in up to 12 installments (SELIC interest rate)
210 days from the publication of the Regulation Decree (which must be published within 30 days of the Law publication)