Brazil: Law No. 12,766/12 - Amendments To Tax Legislation

Law no. 12, 766 was published on December 28, 2012. Subject matter of conversion of Provisional Measure ("MP") no. 575/12 into Law, it brings a number of changes related to the tax legislation, among other provisions.

As there are several measures brought by this Law, we will deal with the main tax changes according to its respective law of origin, as follows: ·

  • Amendment to Law no. 11,079, dated December 30, 2004, which created general rules for public tenders and the entering into public and private partnerships within the Public Administration

With the enactment of MP no. 575/12, converted into Law no. 12,766/12, the amount of fund contribution made in favor of the private partner for the execution of constructions or the acquisition of 'reversible assets' may be excluded from the determination of the net income and from the tax basis of the Contributions to the Social Security Funding ("COFINS"), to the Employee Profit Sharing Program ("PIS"), and the Contribution on the Net Income ("CSLL").

In this context, the portion of fund contribution excluded pursuant to the above proceedings must only be computed in the determination of the net income and in the tax basis of the COFINS, PIS, and CSLL in the proportion in which the cost for executing the constructions and acquiring reversible assets is realized, including through depreciation or end of concession.

  • Amendment to Law no. 10,833, dated December 29, 2003, which deals with the Contribution to the Social Security Funding ("COFINS")

Another change created by Law no. 12,766/12, with effects coming into force as of Jan. 1, 2013, establishes that the revenues deriving from the trade of crushed stone, sand for civil construction, and crushed stone sand will be subject to the COFINS' cumulative system.

It is of note that this taxing system had already been created, for the purpose of the Contribution to the PIS, by article 6 of Law no. 12,693/121.

  • Amendment to Law no. 9,430, of December 27, 1996, which deals with the federal tax legislation, the contributions for the social security, the administrative consultation process, and other provisions.

Law no. 12,766/12 also brought important changes regarding the transfer pricing rules created by Law no. 9,430/96, specifically as to the deductibility of expenses with interest2, establishing that the interest paid or credited to legal entities will only be deductible for the purpose of determining the taxable income up to the amount that does not exceed the amount calculated based on some of the following rates:

I – market rates of sovereign securities of the Federal Republic of Brazil issued in the foreign market in U.S. dollars, in the event of transactions at pre-fixed U.S. dollar rates;

II - market rates of sovereign securities of the Federal Republic of Brazil issued in the foreign market in reais, in the event of transactions abroad at pre-fixed rates; and

III - London Interbank Offered Rate – LIBOR, for the term of 6 (six) months, in other cases.

It should be stressed that, along with the rates defined as above, for the purpose of calculating the interest deductibility limit, a percentage margin – a spread margin – will also be added, which will be defined by an act of the Ministry of Treasury.

The mentioned law also determined that the Ministry of Treasury may set the applicable rate when determining the deductibility limit in the case of transactions in reais abroad at floating rates.

Furthermore, for transactions carried out in other currencies in which a specific LIBOR rate is not issued, the LIBOR rate for deposits in U.S. dollars is to be used.

In addition, Law no. 12,766/12 sets forth that the verification of the deductibility limit described above must be used on the date the transaction is entered into and will be applied to the agreements made as of January 1, 2013. It is worth pointing out that, according to the mentioned rule, novation and renegotiations will be considered new agreements.

Lastly, the above provisions will be ruled by the Federal Revenue Office of Brazil, including with regard to the specifications and conditions of use of the stated rates3.

  • Amendment to Provisional measure ("MP") no. 2,158-35, of August 24, 2001, which amends the legislation of the Contributions to the Social Security - COFINS, to the Employee Profit Sharing and Formation of the Civil Servants' Net Worth Programs - PIS/PASEP and of the Income Tax, among other provisions.

Law no. 12,766/12 also brought important changes as to the general system of penalties for the non-performance of the provisions related to the RFB's accessory bookkeeping requirements originally provided for in article 57 of MP no. 2,158-35/01.

In fact, with the amendment to this article, the tax debtor that fails to submit the statements or digital bookkeeping required by the RFB4 within the set term, or submits them containing incorrect information or omissions, will be required to submit them or provide clarifications within the terms set by the RFB and be subject to the following fines:

I – for untimely submission:

a) R$ 500.00 (five hundred reais) per calendar month or fraction thereof, relative to legal entities that, in their last submission, ascertained their profits by the presumptive profit method;

b) R$ 1,500.00 (one thousand and five hundred reais) per calendar month or fraction thereof, relative to legal entities that, in their last submission, ascertained their profits by the taxable income method or determined them themselves;

II – for failure to meet the order of the RFB to file their statements or digital bookkeeping or to provide clarifications within the terms set by the tax authorities, which will never be shorter than 45 (forty-five) days: R$ 1,000.00 (one thousand reais) per calendar month;

III – for filing their statements or digital bookkeeping containing incorrect, incomplete, or missing information: 0.2% (zero point two percent), not lower than R$ 100.00 (one hundred reais), on the revenue –meaning the revenue deriving from the sale of goods and services– of the month prior to that in which the incorrect statements or digital bookkeeping were submitted.

It is of note that a reduction of 70% (seventy percent) on the penalty amounts and percentages mentioned above is provided for in case the legal entity has opted for the Federal Simplified Tax System for Small Businesses (Simples Nacional).

Furthermore, with regard to legal entities that, in their last filing, used more than one form of profit ascertainment or carried out a corporate restructuring event, the fine specified in letter b of item I above is to be applied.

It is important to stress that the fine stated in item I above will be reduced by half when the statements or digital bookkeeping are not submitted within the set term, but before any official procedure.

  • Amendment to Law no. 10,925, dated July 2004, which reduced the tax rates of the PIS/PASEP and COFINS charged on the import and domestic trade of fertilizers and agribusiness protection products, among other provisions.

Lastly, Law no. 12,766/2012 maintained, up to Dec. 31, 2013, the reduction to zero of the tax rates of the Contribution to the PIS and COFINS charged on the import and gross sales revenue in the domestic market of wheat flour, wheat, and their own premixtures for the production of ordinary bread, as a tax incentive.

Footnotes

1 Which included item XII into article 8 of Law no. 10,637/02.

2 It is worth noting that the same criteria used for the limitation of the expense deductibility with interest will apply in cases related to the receiving of interest by the Brazilian legal entity for the purpose of determining the minimum revenue.

3 As to this, we point out that Normative Rule of the Federal Revenue of Brazil ("IN RFB") no. 1,312 was published on Dec. 31, 2012, providing for the transfer pricing rules created by Law no. 9,430/96 and amended by Law no. 12.715/12, and which created another rule as to the deductibility of expenses of interest paid and credited to related persons abroad. In addition, IN RFB is to be altered in order to contemplate the amendments made to Law no. 12,766/12 in this sense.

4 Pursuant to article 16 of Law no. 9,779/99.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions