Brazilian Tax Review - July/August 2018

Author:Gaia Silva Gaede & Associados
Profession:Gaia Silva Gaede Advogados
 
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Brazil-Argentina Amendment Protocol to Double Taxation Convention

On August 28, Decree 9,482 was published in Brazil's Federal Gazette, enacting the Brazil-Argentina Amendment Protocol to Double Taxation Convention, which is now in force in Brazil.

This Protocol introduces several modifications to the Brazil-Argentina DTC related to: (i) measures to prevent BEPS; (ii) incorporation of changes in the OECD and United Nations model conventions; and (iii) amendments that reflect the countries' specific tax treaty policies.

Rota 2030: Brazil's New Automotive Tax Benefit

On July 6, President Michel Temer signed a provisional measure that establishes Rota 2030, an automotive industry policy that replaces the previous one, which was known as Inovar Auto.

Rota 2030 establishes a discount on corporate income tax for automakers and auto parts suppliers, as well as the concession of ex-tariff to auto parts to reduce taxation on import transactions to zero, among other measures. These benefits will last five years.

This provisional measure is now being analyzed by the Brazilian Congress. If it is approved, the benefits will become effective on January 1, 2019.

Brazilian Government Reduces Reintegra tax benefits

On May 30, Decree 9,393 was published in Brazil's Federal Gazette, reducing the rate for calculating Reintegra credits from 2% to 0.1%.

The Reintegra program aims to reduce the tax burden on goods exported by Brazilian manufacturers by granting PIS and Cofins tax credits. This measure therefore impacts the benefit exoneration of the export transaction.

The Decree is effective immediately, but the Brazilian Federal Constitution establishes several principles that protect individuals from government acts, such as retroactive taxes, and provides legal security. Therefore, the reduction should have become enforceable only 90 days from the date it was enacted.

Brazilian General Data Protection Law

On August 15, the Brazilian General Data Protection Law ("LGPD") was published. It establishes a comprehensive data protection system in Brazil and imposes detailed rules for the collection, use, processing and storage of personal data, both digital and physical.

The LGPD was signed by President Michel Temer with some vetoes and will go into effect 18 months after its publication (February 2020).

Brazilian Government Attempts Again to Change the Taxation on Closed-End Funds and Private Equity Funds

In 2017, the Brazilian Government published Provisional...

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