Foreign companies new obligations under normative ruling of RFB 1634/16

17/02/2017


Lautenschlager, Romeiro e Iwamizu Advogados

The Receita Federal do Brasil issued a Normative Ruling regarding the National Register of Corporate Taxpayers (CNPJ). The main requirement relates to the identification of the final beneficiary in the enrollment of certain entities before Brazilian Tax Authorities, so that the parent companies must be informed up to the individuals characterized as final beneficiaries or certain legal entities.

The Normative Ruling will apply to the following entities: (i) foreign companies, which owns equity interest in Brazil (subsidiary or controlled companies) or rights over investments in the stock market; (ii) foreign companies, which carry out financial leasing, leasing and import of goods for capital contribution in Brazilian companies. Such entities must disclose information about their legal representatives, as well as the parent companies chart up to final beneficiaries. The Normative Ruling defines final beneficiaries as individuals who directly or indirectly have significant control or influence over the entity.

Foreign companies which owns a subsidiary in Brazil, must also submit, in addition to the information about the final beneficiaries, the following documents within 90 days, after the date of registration before the Brazilian Tax Authorities: (i) the articles of association or certificate from the competent commercial registry; (ii) the company's legal representative identification or passport; (iii) documents evidencing the powers of the legal representative identification or passport; (iii) documents evidencing the powers of the legal representative at company's head office; (iv) chart of shareholders and managers; and (v) a certified copy of the power of attorney appointing a legal representative domiciled in Brazil and the ID of the legal representative with domicile Brazil.

The following entities are not required to present their corporate Interest Chain nor the final beneficiary: public companies from countries that require public disclosure of all shareholders considered relevant1; non-profit entities2; multilateral organizations, central banks, government agencies or linked to sovereign wealth funds; pension funds and similar institutions monitored by competent authorities. Such entities must only submit the documents referred herein upon request of the tax authorities. The information to be provided is comprised of: legal representatives, shareholders, managers and directors, if any, as well as individuals or legal entities on behalf of which such entities have been established.

The obligations set out in RFB Ruling nº 1634, including the need to inform the final beneficiaries and eventually to present documents will come into force on July 1st, 2017 for new enrollments in Brazil. On the other hand, the entities registered in the CNPJ before such date must comply with the such rules necessarily after July 1st 2017, along with any amendment to the enrolment before tax authorities.

Foreign companies which do not inform the final beneficiary until December 21st, 2018 neither submit the documents will have their registration suspended and will be prevented from dealing with any financial institutions.

Summary

Foreign companies that owns subsidiary(ies) in Brazil must submit the following documents until June 1st 2017:

1. The article of association or the full text of the entity certificate;
2. The entity's legal representative identification in the home country;
3. The act to demonstrate the powers of the legal representative in the home country;
4. Chart of shareholders and managers;
5. A certified copy of the proxy appointing a legal representative domiciled in Brazil; and
6. A certified copy of the official identity card from the representative in the CNPJ.

Parent companies chart must be presented up to:

- individual who owns directly or indirectly major control in a certain entity (participation higher than 25% in the corporate capital, or which directly or indirectly controls a company's decision; or is entitled to control decisions; or has the power to appoint the directors of company); or
- individual who ultimately benefits from a certain transaction;
- public companies from countries that require public disclosure of all shareholders considered relevant3;
- non-profit entities4;
- multilateral organizations, central banks, government agencies or linked to sovereign wealth funds;
- pension funds and similar institutions monitored by competent authorities;
- investment funds incorporated in Brazil.

 


1 Except entities located in jurisdictions considered to maintain favorable tax regimes.
2 Except entities located in jurisdictions considered to maintain favorable tax regimes.
3 Except entities located in jurisdictions considered to maintain favorable tax regimes.
4 Except entities located in jurisdictions considered to maintain favorable tax regimes.