Answer ... Taxpayers in Brazil must annually file an income tax return in relation to each fiscal year (1 January to 31 December). The deadline for submission of the income tax return is usually the last business day of July the following year. Corporate income taxes are usually due on annual adjusted profit, with monthly pre-payments.

Other tax returns at the federal, state and municipal levels are also due; the corresponding deadlines will depend on the respective legislation.

Most tax returns are submitted online and data reported can be easily cross-checked with data provided in other statements (including those required from financial institutions).

Answer ... The penalties for non-compliance with tax obligations are set out in federal, state and municipal legislation. The standard penalty for late collection of federal taxes, including corporate income taxes, is 0.33% per day, with a cap of 20% for late payments. Delayed payments are also subject to interest calculated according to a federal basic interest rate.

If an audit reveals non-payment of tax, the standard applicable penalty is 75% of the amount of tax amount due. In case of verification and evidence of evasion, fraud or wilful misconduct, this fine is increased to 150% of the amount of tax allegedly due and payable, as determined by the tax authorities.

This penalty can be increased by 50% if, during an audit, the taxpayer does not timely respond to the auditor’s demands for clarifications or requests for certain documents. In such cases, the penalty may thus total 112.5% or 225% of the amount of tax due, depending on whether evasion, fraud or misconduct is also established.

The tax authorities may also apply penalties for non-compliance with tax reporting obligations, even if all taxes have been fully paid. The penalty for untimely filing of most federal tax returns is R$1,500 for each month of delay. In case of omitted, incomplete or inaccurate information in tax returns, taxpayers are subject to a 3% penalty on the value of the irregular commercial or financial transaction.

Although tax liability is, in principle, limited to the legal entity itself, managers and quota holders or shareholders may be held jointly liable for a company’s tax liabilities in the event of its irregular dissolution, actions that exceed the scope of their authority or actions that are contrary to the law or company bylaws. In practice, in cases involving allegations of evasion, fraud or misconduct, the tax authorities commonly order tax assessments of both the legal entity and its managers and quota holders or shareholders for the purposes of determining applicable taxes and penalties.

Answer ... As part of the G20 and the Global Forum on Transparency and Exchange of Information, Brazil has signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, as well as the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information. Both agreements are currently in force.

These instruments provide for administrative cooperation in order to combat tax avoidance and evasion related to transactions carried out from 1 January 2017. In this sense, Brazil has incorporated into its domestic legislation the following forms of automatic exchange of information:

• the Common Reporting Standard for Automatic Exchange of Financial Account Information in Tax Matters;
• country-by-country reporting; and
• exchange on tax rulings.

In addition, Brazil has several signed several double tax treaties with other jurisdictions, which include specific exchange of information provisions.