Businesses generally adopt a corporate form in order to perform their economic activities in Brazil. The main corporate forms used by businesses are corporations (sociedade anônima) and limited liability companies (limitada).

Sociedade Anônima

As a rule, a sociedade anônima must have at least two shareholders, which can be individuals or legal entities, residents or non-residents. However, the Brazilian Corporations Law establishes that exceptionally a sociedade anônima can be (i) incorporated as a wholly owned subsidiary, by public deed, as long as the sole shareholder of the corporation is a Brazilian company; or (ii) converted into a wholly-owned subsidiary as a consequence of the acquisition of its shares by a Brazilian company or merger of its shares into a Brazilian company.

There is no minimum capital requirement, and the liability of shareholders is limited to the price of the shares subscribed or acquired by them.

A sociedade anônima can be publicly held, if the securities issued are admitted for trade in capital markets, or closely-held, if the securities issued are not admitted for trade in capital markets.

Limitada

There is no minimum number of partners required to incorporate a limitada. As such, it is possible to incorporate a limitada with only one partner (limitada unipessoal).

There is also no minimum capital requirement and the liability of the quotaholders is limited to the amount of their respective quotas, but all quotaholders are jointly liable for the paying up any unpaid portion of the quota capital.

Limitadas cannot be publicly held.

Brazilian legislation also allows foreign companies to incorporate branches in Brazil and establishes that such a branch shall be treated as a Brazilian legal entity for tax purposes. The tax deductibility of expenses not associated with the activities of the branch in Brazil is accordingly restricted.

The establishment of a foreign company’s branch depends on a special permit granted by the federal government of Brazil and any amendment to the company by-laws or its articles of association requires the approval of the federal government in order to be valid in Brazil. In view of this, it is not common for foreign companies to incorporate branches in Brazil.

The most commonly used transparent entities in Brazil are consortiums and investment funds.

Consortium

Commonly used to explore public concessions, a consortium is an association set up by two or more companies for a predetermined amount of time to carry out a specific project or undertaking.

The member companies of a consortium are liable for their obligations as established in the consortium agreement, which must be registered in the Commercial Registry. As a rule, there is no joint responsibility between the member companies of a consortium, unless required in specific legislation.

Revenues, costs and expenses registered by the consortium shall be shared according to the provisions of the consortium agreement and the member companies must include such revenues, costs and expenses in their own results, according to their percentage of ownership in the consortium.

Investment Funds

As transparent entities, the income generated by investment funds is taxed at the level of the investors, and the fund manager is liable for withholding the income tax due.

The taxation of the investors in investment funds will vary according to the type of fund, the area of investment and the length of the investment (ie, long-term or short-term).

In order to determine the residence of a legal entity for tax purposes, Brazilian tax legislation takes into consideration only the place of incorporation of the legal entity, meaning that any kind of legal entity that is incorporated in Brazil will be considered as a Brazilian resident and taxed as such, regardless of its place of effective management.

Businesses in Brazil, even if they are owned directly by individuals, are subject to corporate income tax (IRPJ) at a 15% rate. A surcharge of 10% is applicable for taxable income exceeding BRL240,000 per year (approximately USD48,000).

In addition to the IRPJ, a social contribution on net profit (CSLL) is also due by Brazilian companies at a 9% rate, except for financial entities, which are currently subject to 15% or 20% rates, depending on the financial activity performed.

Brazil legal entities may be subject to the calculation of IRPJ and CSLL based on the following two main regimes: actual profit or deemed profit.

Actual Profit System

Under the actual profit system, the taxable income corresponds to the accounting profit accrued by the company adjusted in accordance with the additions and exclusions set forth by tax legislation, minus the offsetting of accumulated tax losses from previous years (limited to 30% of the adjusted profit). The main tax adjustments are:

• permanent additions – eg, non-deductible expenses, profits earned abroad and losses resulting from the equity pick-up method of accounting;
• permanent deductions – eg, profits resulting from the equity pick-up method of accounting, interest on net equity and tax benefits;
• temporary additions – eg, provisions; and
• temporary deductions – eg, differences in depreciation between tax and accounting criteria

Deemed Profit System

The deemed profit system may apply to companies with yearly revenues of up to BRL78 million (approximately USD15.6 million) or companies that are not mandatorily subject to the actual profit system. Under the deemed profit regime, the taxable basis corresponds to deemed percentages of the gross revenues of the company (such percentages vary from 1.6% to 32% depending on the activities of the company) plus other taxable revenues, without any deductions for costs and expenses or tax losses carried forward. Accrual or receipt basis may apply.

Lei do Bem

A special incentive for technological innovation (the lei do bem) is applicable to legal entities that carry out research on new products and manufacturing processes, and improvements in quality, productivity and competitiveness of existing products and manufacturing processes. This technological innovation incentive provides for the following benefits.

IRPJ and CSLL benefits:

• deduction of expenses related to technological innovation R&D;
• additional exclusion from the IRPJ and CSLL taxable basis of percentages varying from 60% to 100% of the expenses related to technological innovation R&D (conditions must be met);
• full depreciation in the year of acquisition of new assets used in technological innovation R&D; and
• accelerated amortisation of costs with the acquisition of intangibles linked to the technology innovation R&D.

Other benefits:

• 0% withholding tax on payments or credits to non-residents for the registration and maintenance of trade marks, patents, and cultivars abroad;
• 50% reduction of the excise tax (IPI) levied on the purchase of assets destined for technological R&D; and
• government subvention of up to 60% of the value of the remuneration of researchers holding master’s or PhD degrees.

Brazilian tax legislation provides for IRPJ incentives in order to promote the development of certain regions’ economic sectors.

Incentives for Regional Development

Companies in the North and Northeast of Brazil may benefit from a 75% IRPJ reduction if their activities are considered as a priority (such activities are defined by Presidential Decrees). In general terms, taxpayers may benefit from this reduction for a ten-year period provided they apply and have their projects approved before 31 December 2028. The benefit shall be approved by the Brazilian Federal Revenue Service based on a prior technical analysis of the regional Superintendencies (SUDAM/SUDENE).

The IRPJ reduction only applies to profits directly related to certain encouraged economic activities (eg, infrastructure related to energy, telecommunications, transportation, pipeline installation, gas production, water supply, and sanitation services projects; tourism; manufacturing industry in several areas including machinery and equipment, food and beverages, and pharmaceuticals; electro-electronic, mechatronics, information technology, and biotechnology; and the component industry).

Oil and Gas Sector Incentives

Companies that act in the oil and gas sector in Brazil may fully deduct from the IRPJ and CSLL taxable basis expenses and depreciation/exhaustion charges related to the exploitation of oil and gas. In some situations, an exemption of withholding income tax may apply.

Agricultural Sector Incentives

Companies that act in the agricultural sector in Brazil are allowed to fully offset their tax losses carried forward, without the need to comply with the 30% limitation mentioned in 2.4 Basic Rules on Loss Relief, as well as to benefit from accelerated depreciation of goods acquired for use in agricultural activities for IRPJ/CSLL purposes.

Under the actual profit regime, tax losses can be carried forward without any statute of limitations, provided that the offsetting does not exceed 30% of the taxable basis of any given period. No carry-back is allowed.

Non-operating tax losses may be offset only against non-operating profits.

A restriction to the offsetting of tax losses is imposed where there is a change (i) of control, and (ii) in the business activities pursued by a Brazilian company. Accordingly, a company cannot offset its tax losses if, from the date of the accrual of such losses to the date of their offsetting, a change in the control of the company and in the company’s business activities has occurred concurrently.

In the case of a spin-off, the company forfeits tax losses proportionally to the value of the spun-off part of its net worth. In the case of a merger, the merged company’s tax losses cannot be offset against the profits of the surviving company.

The general rule for the deduction of interest paid by local corporations is that the interest paid will only be considered deductible for tax purposes if it can be demonstrated that the loan to which the interest is related was necessary to the maintenance of the company’s activity.

In addition to the general rule, the deduction of interest derived from loans with related parties and/or parties resident in tax havens or subject to privileged tax regimes, are subject to compliance with thin capitalisation and transfer pricing rules.

Regarding the thin capitalisation rules:

• if the creditor is a related party, the total debt amount shall not exceed twice the value of the equity stake held by the related party in the Brazilian company’s net worth;
• if there is more than one creditor that is a related party, the total debt amount shall not exceed twice the value of the equity stake of all the related parties abroad in the Brazilian company’s net worth; or
• if the creditor (related party or not) is located in a tax haven or subject to a privileged tax regime, the total debt amount shall not exceed 30% of the Brazilian company’s net worth.

Regarding the transfer pricing rules, as of 2024, the interest rate of the loan must comply with the arm’s length principle.

Consolidated group taxation is not applicable in Brazil and, as a rule, group companies are not allowed to utilise separate company losses.

Exceptionally, there are some tax settlement programmes provided by the federal government that allow companies to offset tax losses accrued by group companies against federal taxes due.

The capital gains accrued by a Brazilian company will be included in the IRPJ/CSLL taxable base, subject to general rates described in 1.4 Tax Rates.

VAT on Sales and Services (ICMS)

VAT is a state tax levied on the imports of goods, the domestic circulation of goods, inter-municipal or interstate transport services, and communication services.

Generally ICMS rates are:

• 17% to 21% (rates vary depending on the goods) on imports and circulation of goods within the same state;
• 17% to 21% on communication services;
• 12% on transportation services;
• 4% on interstate transactions involving imported goods that do not undergo a manufacturing process after their customs clearance or involving goods submitted to manufacturing if that manufacturing results in a final product more than 40% of the value of which is in its imported content;
• 7% on shipments from taxpayers based in the South/Southeast to taxpayers based in the North/ Northeast/Central West and the state of Espírito Santo; and
• 12% on other interstate transactions.

Tax on Services (ISS)

ISS is a municipal tax on services levied on the import and the domestic rendering of services listed in a Federal Supplementary Law. The ISS minimum and maximum rates are, respectively, 2% and 5%. The ISS rates vary in accordance with the service provided and the municipality competent to charge the tax.

IPI

IPI is a federal tax charged on the domestic shipment of goods from a manufacturing entity (or from an entity that the IPI legislation qualifies as a manufacturing entity even if there is no direct manufacturing, such as entities that import products for resale in Brazil), or on the import of goods (upon customs clearance of manufactured products). IPI rates vary according to the nature of the good (pharmaceutical products, for instance, are subject to zero rates as they are considered essential, whereas luxury or superfluous articles can be taxed at rates of up to 300%) and its classification under the IPI Table of Rates. IPI rates generally range from 3.25% to 19.5%.

PIS and COFINS are also due upon import of goods (rates of 2.1% and 9.65% respectively) and services (rates of 1.65% and 7.6% respectively).

Social Security Contributions on Revenues (PIS/COFINS)

PIS and COFINS are federal social security contributions levied on revenues earned by legal entities. Exceptions apply (eg, dividends and revenues derived from exports of goods or services). As a rule, PIS and COFINS rates are 1.65% and 7.6% respectively, if the company is subject to the non-cumulative system, and 0.65% and 3% respectively, if the company is subject to the cumulative system.

Customs Duty (II)

The customs duty (II) is a federal tax due on Brazilian importers levied on imports of goods and charged for the clearance of such goods from customs. Applicable rates vary per imported item and may range from 0% to 35%. II is not a VAT.

Tax on Financial Transactions (IOF)

A tax is levied on credit transactions at a 0.0041% daily rate plus a 0.38% surcharge, and on exchange transactions generally at a rate of 0.38% and insurance transactions at rates varying from 0% to 7.38%, as well as on securities at variable rates.

Urban Property Tax (IPTU)

A municipal tax is levied annually on the ownership or possession of any real estate located in urban areas. The rates vary according to the municipality. In the city of São Paulo, the rates range from 1% to 1.5% with discounts or additions granted based on the market value and use of the relevant property.

Tax on Vehicle Ownership (IPVA)

A state tax is levied annually on the ownership of land, water and air motor vehicles. The applicable rate may vary according to each state. In São Paulo, the tax rate varies from 1.5% to 4%.

Tax on Real Estate and Related Rights Transfer (ITBI)

A municipal tax is levied on inter vivos and remunerated transfers of ownership or in rem rights over real estate. The applicable rate may vary according to the municipality. In the city of São Paulo, the general rate is 3%.

Social Security Contributions

Social security contributions due by companies are generally composed of a fixed rate of 20%, which is supplemented by rates generally varying from 0.5% to 6% in the case of compensation paid to employees. The contributions to support welfare services (which are in addition to social security contributions) comprise rates of up to 5.8% over the compensation paid to employees.

Closely held local businesses usually operates in corporate form.

Income earned by individual professionals is subject to progressive rates up to 27.5%.

In principle, the 34% corporate rate (25% IRPJ rate plus the 9% CSLL rate) is higher than the individual rate. However, if the company is subject to the deemed profit regime, there are some situations in which the effective corporate rate could be lower than the individual rate.

In view of this situation, if the Brazilian tax authorities understand that a company has been incorporated with the sole purpose of allowing the individual to earn income at a lower tax rate with little to no substance (eg, offices and employees), Brazilian tax authorities may challenge the existence of the company and tax the income as if it had been earned by the individual.

Brazilian tax legislation does not provide for any taxation on the distribution of dividends. In view of this, Brazil does not have rules preventing closely held corporations from accumulating earnings for investment purposes.

Distributions of dividends from Brazilian Companies is exempt from income tax, regardless of the beneficiary (individual or legal entity and resident or non-resident).

If an individual sells it shares in a Brazilian closely held corporation, the positive difference between the sale price and the acquisition cost will be taxed as capital gains and therefore subject to progressive rates of 15% to 22.5%. If the beneficiary of the capital gain is domiciled in a tax haven, a 25% withholding income tax applies, regardless of the amount of the capital gain.

Distributions of dividends from Brazilian companies is exempt from income tax, regardless of the beneficiary (individual or legal entity and resident or non-resident).

The gain on the sale of shares by Brazilian individuals in publicly traded corporations is subject to taxation at a 15% rate, as a rule. However, gains in day trade operations are subject to a tax rate of 20%.

The gains on the sale of shares in publicly traded corporations by non-residents are, in principle, tax exempt. If the non-resident investor is located in a tax haven the gains will be taxed according to the rules applicable to investors resident in Brazil.

Distributions of dividends from Brazilian companies is exempt from income tax, regardless of the beneficiary (individual or legal entity and resident or non-resident).

In general, royalties and interest paid by Brazilian residents to non-resident companies is subject to withholding tax at a rate of 15%. If the non-resident company is a resident of a tax haven, a higher tax rate of 25% is applicable. With regard to interest, certain specific cases involving investment funds may be subject to a zero rate.

Tax authorities in Brazil have shown themselves to be determined to collect withholding taxes on the import of services. Local legislation has a broad concept of technical services – considering any service provided through the use of specific knowledge or that involves administrative assistance or consultancy, irrespective of any transfer of technology to be technical in nature – and the tax authorities’ interpretation is that withholding tax is due regardless of the place where the services are provided. Tax authorities also seek to frame the import of services as royalties for treaty purposes.

In addition, a contribution for the intervention in the economic domain (CIDE) is also due at a 10% rate by Brazilian residents on royalties and compensation for technical services paid to non-resident companies. CIDE is borne by the Brazilian resident (it is not a withholding tax).

Considering that dividends are exempt in Brazil and that the double tax treaties signed by Brazil allow the taxation of capital gains, there is generally no reason for foreign investors to use specific tax treaty countries to make investments in Brazil. However, the countries with which Brazil has signed a tax treaty and which have the highest amount of investments in Brazil are the Netherlands, Luxembourg and Spain.

Due to the Brazilian IRPJ/CSLL particularities and to the fact that dividends are exempt in Brazil, it is not usual for Brazilian tax authorities to challenge the use of treaty country entities by non-treaty country residents. Nevertheless, the most recent double tax treaties signed by Brazil provide for limitations on the entities that are entitled to the benefits of a double tax treaty.

Until the end of 2023, the biggest transfer pricing issue for inbound investors in Brazil was the difference between the local rules and the OECD guidelines, which led to different profit margins being acceptable in Brazil compared to other nations, specifically due to the fact that Brazilian rules provided for fixed margins instead of margins based on the arm’s length principle and did not provide for profit-based methods.

As of 2024, when Brazilian transfer pricing rules were substantially changed for the purposes of alignment with the OECD transfer pricing guidelines, the biggest issue for inbound investors operating in Brazil is the adaptation of their transactions to the new transfer pricing rules.

Another relevant transfer pricing issue in Brazil is that double tax treaties signed by Brazil do not provide for compensating adjustments.

Brazilian transfer pricing rules in force until the end of 2023 were based on fixed profit margins and not on the arm’s length principle, meaning that the fact that a distributor had limited risk was not relevant for Brazilian transfer pricing rules. Considering that the new Brazilian transfer pricing rules, mandatorily in force as of 2024, are based on the arm’s length principle, it is possible that discussions on the use of such arrangements will arise in the coming years.

The Brazilian transfer pricing rules have been substantially revised to align with the OECD transfer pricing guidelines. As these only came into force in 2024, potential issues could relate to difficulties in obtaining local comparables and timing issues with performing year-end adjustments. Local legislation requires that the year-end adjustment is made until the end of the calendar year to which it refers.

Historically, Brazilian tax authorities tends to be aggressive regarding transfer pricing rules, even using secret comparables.

Transfer pricing disputes are generally settled in administrative tax courts. Brazil does not include compensating adjustments in double tax treaties (Article 9.2 of the OECD Model Tax Convention). As such, double tax treaties are not used to settle transfer pricing disputes.

Although the mutual agreement procedure (MAP) is regulated in local legislation, this procedure is not yet common in Brazil.

The Brazilian transfer pricing legislation in force as of 2024 provides for compensating adjustments when the transfer pricing adjustment is performed spontaneously by the taxpayer, as long as certain requirements are complied with. Compensating adjustments are not allowed when a transfer pricing claim is settled.

Although MAPs are provided for in local legislation, Brazil does not have significant practical experience with them; instead, transfer pricing issues have historically been resolved through administrative and/or judicial discussions.

Local branches and subsidiaries of non-local corporations are subject to the same tax treatment.

Capital gains acquired by non-resident individuals and legal entities on the sale of stock in local corporations are subject to withholding tax at progressive rates of 15% to 22.5%. If the beneficiary of the capital gain is domiciled in a tax haven, a withholding tax of 25% applies, regardless of the amount of the capital gain.

There are no rules providing for the taxation on the indirect sale of stock of a Brazilian company.

Brazilian tax legislation does not provide any rules for the taxation on the indirect sale of stock of a Brazilian company. However, if the Brazilian tax authorities understand that a foreign holding company was used to avoid the triggering of taxation on capital gains in Brazil, they could disregard the holding company and consider that the price was paid for the acquisition of local company stock and thus subject to capital gain taxation as described in 5.3 Capital Gains of Non-residents. There was an attempt to include change of control provisions in Brazilian tax legislation in the past, but it was unsuccessful.

Brazilian subsidiaries and branches are subject to same rules for determining taxable income as described in item 2.1 Calculation for Taxable Profits, regardless of being locally or foreign owned.

As a general rule, in order for an expense to be deductible it is necessary to prove that such expense is necessary, usual and normal for the performance of the company’s activities/undertakings and that it relates to services that were actually performed.

As for payments for management and administrative expenses incurred by a non-resident affiliate, since they are transactions with related parties, it is also necessary to comply with transfer pricing rules. As such, if expenses correspond to back office services, they probably fall under the definition of low value-added intragroup services thus being subject to a simplified approach for transfer pricing (5% margin on costs).

The constraints applicable to related-party borrowing are transfer pricing and thin capitalisation rules, described in item 2.5 Imposed Limits on Deduction of Interest.

Brazilian companies are taxed on their worldwide income.

Capital gains and income earned abroad, as well as the profits accrued by branches, affiliated companies or direct and indirect controlled companies abroad, are included in the taxable basis of IRPJ/CSLL, at a general rate of 34%, in the year they are accrued, regardless of their distribution or availability to the Brazilian controlling company.

In order to avoid double taxation, Brazilian legislation allows Brazilian companies to offset the income tax paid abroad with the IRPJ and CSLL due in Brazil, up to the limit of IRPJ and CSLL levied in Brazil on such income.

Foreign income is not exempt in Brazil, so there are no rules limiting the deduction of local expenses because of attribution to exempt foreign income.

Due to the fact that profits earned by foreign subsidiaries are included in the taxable basis of IRPJ/CSLL of the controlling Brazilian company in the year that such profits are accrued, dividends paid by subsidiaries are not taxed at the moment of their distribution.

The licensing of an intangible developed by a Brazilian company to a related party abroad is subject to Brazilian transfer pricing rules and thus should be compensated according to the arm’s length principle. Corresponding compensation or transfer pricing adjustment is subject to IRPJ/CSLL.

Brazilian worldwide taxation rules tax profits earned by any subsidiary, affiliate or branch abroad. In view of this broad application of worldwide taxation, it is arguable that the Brazilian rules could be considered as a CFC-type rules.

Brazilian tax legislation does not provide for any rules related to substance of non-resident companies. However, Brazilian courts have already issued decisions stating that if the non-resident company’s substance is not verified it could be disregarded for tax purposes.

The capital gains are included in the IRPJ/CSLL taxable basis, similarly to capital gains from local from local investments (see 2.7 Capital Gains Taxation).

The Brazilian National Tax Code (CTN) provides for a general anti-avoidance rule stating that Brazilian tax authorities may disregard acts and transactions carried out with the sole purpose of masking the occurrence of the tax triggering event or the nature of the elements constituting the tax obligation. Although controversial, Brazilian tax authorities tend to disregard acts and transactions when they identify a lack of a valid economic purpose.

There is no regular routine audit cycle in Brazil. The only requirement related to tax audits established in Brazilian legislation is that they need to start within the statute of limitations of five years.

Brazil has already implemented the following recommended changes based on the OECD’s Base Erosion and Profit Shifting actions:

• action 1 – taxation on remittances related to digital economy;
• action 3 – implementation of CFC rules;
• action 4 – implementation of thin capitalisation rules;
• action 5 – list of tax havens and privileged tax regimes;
• action 6 – implementation of anti-abuse clauses in the recent tax treaties signed;
• actions 8–10 – alignment of the local transfer pricing rules with the OECD guidelines;
• action 13 – implementation of the country-by-country report; and
• action 14 – implementation of the mutual agreement procedure (MAP).

As an active member of the OECD/BEPS Framework, Brazil intends to implement most of the BEPS’ actions. However, the government has already stated that some of the actions will not be implemented (eg, MLI and disclosure of aggressive tax planning). Discussions on the implementation of Pillar One and Two is still in its early stages and formal declarations on how, when and if they are going to be implemented are still awaited.

International taxes have a high public profile in Brazil, as the country has already implemented CFC rules and aligned its transfer pricing rules with the OECD guidelines. This should have a positive influence on the implementation of BEPS recommendations.

The Brazilian state has shown interest in having an internationally competitive tax policy in order to attract foreign investments. However, in recent years, the main focus of the tax administration has been to maximise the country’s tax collection. This focus is in line with most BEPS action plans.

The Brazilian tax system is complex and provides for several different taxes and tax incentives, mainly in the indirect tax area, which have led to long-standing disputes between taxpayers and tax authorities. A tax reform aimed at simplifying the system, minimising the number of taxes, limiting different tax treatments and reducing tax litigation, was recently approved in the National Congress. However, it is still uncertain whether, when implemented, these objectives will be met.

As the recent main focus of the administration has been to maximise the tax collection, some measures have been taken to restrict the exclusion of tax incentives in the calculation of the IRPJ/CSLL and PIS/COFINS taxable bases.

Brazilian tax legislation provides for the tax deduction of a type of remuneration paid to shareholders (calculated on the net worth), known as interest on net equity (JCP) – there has been some discussion on whether this could be considered as a hybrid instrument. Changes were recently introduced to legislation aiming to limit the amount of this deduction.

Brazil does not have a territorial tax regime.

Brazil has had rules limiting the deduction on interest for quite some time and this has not adversely affected investment.

Brazil does not have a territorial tax regime.       

Considering that Brazilian tax authorities already adopt a substance over form approach and tend to disregard contracts, structures and transactions where they believe there to be a strong case for doing so based on a lack of substance argument, it is not likely that the new double tax convention limitations will have any impact on inbound and outbound Brazilian investors.

In June 2023, Brazil modified its transfer pricing rules for the purposes of alignment with the OECD transfer pricing guidelines.

Given that the transfer pricing rules in force until the end of 2023 were different from the OECD guidelines as they were based on fixed margins provided for in the legislation, the introduction of more subjective rules based on the arm’s length principle substantially changed the transfer pricing regime in Brazil.

As the new transfer pricing rules were only recently implemented in Brazilian legislation (January 2024), it is not yet possible to determine whether the taxation of profits from intellectual property will be a source of controversy under the new regime.

Brazil has adopted a very favourable position on transparency in international taxation matters, being part of the information exchange network provided for in BEPS action 14 and having implemented the country-by-country report rules.

Although Brazil has not implemented changes in the legislation regarding digital economy businesses, Brazilian tax authorities have significantly changed their approach regarding the taxation of remittances made abroad related to the digital economy, taxing transaction that were not taxed before (or were subject to lower taxation).

A few proposals related to digital taxation have been discussed in the National Congress, but none of these have been successful yet. Nevertheless, Brazilian tax authorities adopt an aggressive approach aiming to tax almost all digital transactions at source.

Royalty payments related to offshore intellectual property deployed in Brazil is subject to withholding tax at a general rate of 15%. Payments made to tax havens are subject to an increased rate of 25%.