Global

Details

  • 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.

Background

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).

Guidance

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




©2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.


The KPMG logo and name are trademarks of KPMG International.


KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.


The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

 

Share this

Share this

Subscribe

Subscribe to receive the latest TaxNewsFlash email alerts (you must select the option for TaxNewsFlash)


Already a Subscriber? Login


Not a member? Subscribe now