Brazil: Brazilian Tax Review – July/August


In May 2016, the Brazilian Federal Revenue Office (RFB) published tax ruling 63 on the application of the profit margins to be used in the calculation of the transfer price using the Resale Price Method – RPM.

In order to calculate the parameter price by this method, the law establishes presumed profit margins (from 20% to 40%) that are determined depending on the industry. In order to clarify a doubt about which "industry" should be used (taxpayer/importer or domestic purchaser of the goods), RFB clarified that the criteria to determine the profit margin used in RPM is the industry of the taxpayer/importer, not that of the domestic purchaser.


In August 2016, the RFB published Interpretative Declaratory Act RFB 7, which concludes that a capital contribution made by a non-resident in a Brazilian Company with assignment of rights is subject to Withholding Income Tax (WHT) of 15% and, if the rights include the acquisition of technical knowledge or the transfer of technology, it is also subject to the Contribution for Intervention in the Economic Domain (CIDE) at a rate of 10%.

It bears noting that, despite the position taken by the RFB, there are arguments to defend the non-taxation of these transactions by WHT and CIDE since there are no remittances made by a resident to a non-resident in a capital contribution.


The High Chamber of Tax Appeals at the Taxpayers' Council - CSRF (the highest administrative appeals board) authorized levying the Social Security Contribution on supplementary pension plans granted to companies' executive officers. The judges held that some specific plans qualify as salary since (i) the amounts contributed by the company were defined based on targets met by employees; (ii) the amounts contributed by the company were defined based on the position of the employee; and (iii) there are differences in the pension plans granted to employees based on their position in the company.

It bears noting that this issue has not yet been finally resolved by the courts. Additionally, the degree of risk of a challenge on this matter by the tax authorities depends on how the pension plan is structured.

Supreme Court to analyze the non-collection of IPI on the resale of imported goods

As noted in previous editions, in a decision under the repetitive appeals system, the Superior Court of Justice held that sales of imported goods are subject to the Excise Tax (IPI), even in cases in which the goods were not subject to any manufacturing process. On the other hand, the Supreme Court issued a preliminary injunction in June 2016 in a lawsuit concerning the unconstitutionality of such taxation, halting the collection of IPI on the resale of imported goods until a final decision by the Court.

On July 1, the Supreme Court recognized the existence of a General Repercussion for this Extraordinary Appeal (n. 946648), which means it is now a leading case for the Court to examine the matter.

ATA Carnet can be used for temporary exports of goods

The Brazilian Federal Revenue Office (RFB) issued Normative Instruction 1,657 to regulate the use of Ata Carnet for the temporary export of goods. As noted in our previous edition, the RFB had already regulated the use of Ata Carnet for temporary admission.

Because the ATA system allows the free movement of goods across frontiers by covering the transaction with a single document, the implementation of this system for temporary admissions and exports represents a considerable simplification of customs procedures for importers and exporters.

The new phase of the AEO ("Authorized Economic Operator") program is up and running: AEO Full (AEO-F)

As reported in our 01/2015 edition, the Brazilian Federal Revenue Office (RFB) launched the AEO Program in 2015 to implement this voluntary certification of supply chain operators that represent low risk in their operations, both in terms of the physical security of the cargo and in fulfilling customs requirements. International trade operators eligible for certification are Brazilian importers and exporters, warehouse companies, port and airport operators, carriers, customs brokers etc.

The program allows the certification of international trade operators in three different modalities: (i) AEO-Security (AEO-S), concerning safety requirements applied to the logistics chain; (ii) AEO-Compliance (AEO-C), based on the fulfillment of tax and customs obligations; and (iii) AEO-Full (AEO-F), based on requirements listed for AEO-S and AEO-C.

Right now, many Brazilian companies are aiming to obtain AEO-Full, which came into force in 2016, because it, along with all the other general benefits of the program, is supposed to simplify customs procedures for both exporters and imports, such as: the likelihood that export documentation will be selected for review will be reduced in relation to other exporters; exports will be processed with priority, the likelihood that import documentation will be selected for review will be reduced in relation to other importers and imports will be processed with priority.

To obtain this certification, Brazilian companies must prove they meet admissibility and eligibility requirements by submitting several documents, including the AEO Certification Application, the Self-Assessment Questionnaire (QAA) and the Supplemental Validation Report.

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.

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