Brazil: Tax updates concerning financial, insurance, and real estate industries
Recent tax developments in Brazil
Recent tax developments in Brazil
Recent tax developments in Brazil may affect companies operating in the financial, insurance, and real estate sectors.
Tax transaction updates
Law 14,375/2022 established more advantageous conditions in relation to those already provided for by Law 13,988/20, such as:
- Changing the maximum discount of the total amount of credits to be traded from 50% to 65%
- Increasing from 84 to 120 the maximum installments in the transaction
- Allowing the use of the corporate income tax (imposto de renda das pessoas jurídicas or IRPJ) loss and the negative social contribution on net profit (contribuição social sobre o lucro líquido or CSLL) calculation base for the payment of debts, up to the limit of 70% of the remaining balance, after discounts
In addition, the law expanded the scope of the transaction, possibly allowing tax credits under the administration of the Federal Revenue Service, regardless of whether or not they are registered in active debt, including tax credits in tax administrative litigation.
In addition, in SEI Joint Opinion No. 37/2022/ ME_ÁGIO - Clarifications Through Joint Opinion SEI No. 37/2022/ME, the Attorney General's Office clarified doubts raised by taxpayers in relation to Public Notice 9/22 dealing with the tax transaction on debts related to goodwill in the legal regime prior to Law 12,973/14.
Domestic taxation of foreign subsidiary profits
The Superior Chamber of Tax Appeals (Câmara Superior de Recursos Fiscais or CSRF) held that profits earned by subsidiaries of a Brazilian company located in Spain and Luxembourg could not be taxed (i.e., included in the IRPJ and CSLL calculation bases) because Brazil has agreements with those countries to avoid double taxation.
Real estate taxation guidance
The Federal Revenue Service of Brazil (RFB) published DISIT/SRRF06 Consultation Solution 6.009/2022 which determines the application of the presumption percentage of 8% and 12% for IRPJ and CSLL, respectively, in the determination of the calculation bases of said taxes in the gross income earned through the exploration of real estate activity related to the purchase and sale of properties. Companies must follow this form of taxation even if the properties have previously been used for leasing to third parties, if the activity is the object of the legal entity.
Guidance on creditable expense for transportation vouchers
The Federal Revenue of Brazil (RFB) published DISIT/SRRF03 Consultation Solution No. 3.006 which confirms that the creditable expense for providing transportation vouchers to employees is the amount that exceeds 6% of the employee's basic remuneration.
Read a July 2022 report (Portuguese) prepared by the KPMG member firm in Brazil
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