Following a global trend of combating tax evasion, foreign currency drain and money laundering, as well as complying with the foreign treaties entered into for such purposes (such as the adherence to the Foreign Account Tax Compliance Act (FATCA), to the Convention on Mutual Administrative Assistance in Tax Matters and the BEPS – Base Erosion and Profit Shifting, both of the Organization for Economic Co-operation and Development (OECD), and to the Automatic Exchange of Financial Information in Tax Matters (AEOI) convention, of the G20), the Brazilian government has enacted this year a pack of rules aiming at combating the crimes referred to herein above.
The first rule was published in January of the current year (Law 13.254/16) and sets forth the exchange and tax regularization of non-declared amounts maintained by Brazilian residents abroad, which has already been object of a specific newsletter.
Apart from the above mentioned Law 13.254/16, it has been recently published (as of May 09 of the current year) the IRS Normative Ruling nº 1.634/2016, that updates several proceedings related to the Corporate Taxpayer’s Registry (Cadastro Nacional da Pessoa Jurídica – “CNPJ”). Amongst the most prominent modifications is the obligation to inform the “beneficial owner” of all corporate entities enrolled with the CNPJ, including those headquartered abroad.
Said normative is in line with the rules issued by the Brazilian Central Bank that since 2009 required from the financial institutions acting in Brazil the collection of registration information from its corporate clients, including the corporate organogram up to the beneficial owner (“beneficiário final”)
For the purposes of this new IRS ruling, the beneficial owner shall be the individual that, either directly or indirectly, holds, controls or exercises significant influence in a company or the individual in whose name a transaction is performed.
Either the Brazilian companies and the companies headquartered abroad that hold in Brazil corporate interest in unlisted companies, bank accounts, investments in the financial or stock market, real estate, vehicles, watercrafts, aircrafts, as well as those performing leasing activities, lease of equipment and importation of goods without exchange cover, destined to pay up the share capital of a Brazilian company, are compelled to indicate its beneficiary ownership under the terms of the IRS ruling.
Referred Normative Ruling exempts from the fulfillment of the obligation to indicate the beneficial owner only the companies incorporated in Brazil as a listed company or companies incorporated in countries that require the public disclosure of all relevant shareholders and that are not headquartered in jurisdictions with favored taxation (tributação favorecida) or subject to privileged tax regime (regime fiscal privilegiado).
The noncompliance with such obligation will result in the suspension in the enrollment with the CNPJ, without prejudice to other administrative measures that shall be initiated by the Brazilian IRS.
The obligation to inform the beneficial owner initiates in January 1st. 2017 for the companies requiring its enrollment with the CNPJ as from such date and for those already enrolled with the CNPJ the update shall take place when any modification in the registration information is required as from June 01 2016 or until the deadline in December 31, 2018.
The Brazilian legal environment is changing quickly as regards the fighting of tax evasion, foreign currency drain and money laundering and is mandatory for the individuals interested in such subject to follow up the developments in order to avoid or reduce eventual penalties.
Guarnera Advogados has a capable team of lawyers that is ready to support its clients in all these aspects. Do not hesitate to contact us.