• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 9/18/2013

Brazil - Taxation of foreign profits 

September 18:  Brazil’s tax authority issued guidance in August 2013 concerning the taxation of profits earned abroad, with an intention to clarify and resolve a perceived conflict on the application of Brazil’s tax law provision and of income tax treaty provisions on the taxation of foreign profits.


In general, Brazilian companies must include in their income tax base, the amount of profits generated by foreign subsidiaries or affiliates and report this amount as subject to income tax and the social contribution (CSLL) at a combined rate of approximately 34%.

Income tax treaties in Brazil’s treaty network, however, provide that profits earned in a particular jurisdiction are subject to tax only in that jurisdiction, unless the foreign profits are related to activities conducted by a permanent establishment located in the other jurisdiction (generally following the rules of Article 7 of the OECD Model Convention).


Brazil’s tax authority issued guidance (Solução de Consulta Interna nº 18 (8 August 2013)) to clarify the treatment of foreign income or profits under Brazilian tax law and application of the income tax treaty provisions and generally to provide that these are not incompatible.

Read a September 2013 report (Portuguese) prepared by the KPMG member firm in Brazil: Tax News: Solução de Consulta Interna - Lucros Auferidos no Exterior

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