IPI tax rate for ingredient used in soft drink manufacturing modified

On July 1, 2019, Decree No. 9.897/2019 was published, amending the Supplementary Note NC (21-2) in Chapter 21 of the IPI Tax Table ("TIPI"). The tax rate for the product classified under NCM code 2106.90.10—which refers to compound non-alcoholic preparations (concentrated extracts or concentrated flavors), used to manufacture of soft drinks listed in Chapter 22, with a dilution capacity of up to 10 parts of the beverage for each part of the concentrate—has been changed.


Senate bill intends to change administrative proceedings deadline count

On July 4, 2019, the Constitution and Justice Commission ("CCJ") approved Senate Bill ("PLS") No. 35/2018, which proposes that administrative proceedings should be counted only in business days, as is the case with judicial lawsuits. This would extend deadlines, skipping weekend days and government-observed holidays.

The bill is now under consideration by the House of Representatives.

OECD and Brazilian IRS issue joint report on tax matters

On July 11, 2019, the Brazilian IRS and the OECD issued a joint report following a series of discussions with shareholders, lawyers and tax authorities that began in February 2018 to analyze Brazil's administrative and legal treatment of transfer pricing and compare it with the practice adopted by OECD member countries.

The report concluded that in order to be aligned with OECD rules, Brazil would need to adopt the arm's length principle by taking steps including simplifying bureaucratic processes to facilitate compliance, increasing the effectiveness of tax administration and assuring tax legal certainty in international transactions.

Resolution No. 83/2019/CAT/PGACTP/PGFN-ME: Criterion for zero rate on IOF

On July 14, 2019 PGFN Resolution No. 83/2019/CAT/PGACTP/PGFN-ME was published, establishing that the zero rate of the Tax on Financial Transactions in the Currency Exchange ("IOF-Câmbio") must be applied in the settlement of export exchange contracts, in accordance with the terms set forth by National Monetary Council ("CMN") and the Central Bank of Brazil's ("BACEN") regulations.

Note: The zero rate will be levied regardless of whether the funds were initially received in an account held abroad.

Normative Instruction No. 1,901/19: Repetro-Industrialização regulation

On July 19, 2019, Normative Instruction No. 1901 was published, establishing a special regime for the manufacturing of goods destined to be used for the exploration and production of oil, natural gas and other fluid hydrocarbons (the "Repetro-Industrialização" regulation). According to the regulation, federal taxes will be suspended on the importation or local purchase of raw materials, intermediate products and packaging materials to be used to manufacture goods later destined to entities legally qualified in Repetro and Repetro-SPED.

The following entities can be legally qualified to the regime: (i) the manufacturers of final goods to be directly supplied to other companies qualified in the Repetro and Repetro-SPED regimes and (ii) intermediate manufacturers whose goods will be used in the manufacture of the final product.

Rio de Janeiro State Law No 8,481/2019: The granting of tax benefits

On July 29, 2019, State Law No 8,481/2019 was published, regulating the validation of the tax benefits granted by the State of Rio de Janeiro that had not been approved by the National Finance Policy Council ("Confaz") until August 2017. After fulfilling all federal requirements, Rio de Janeiro finally completed the validation of the tax benefits process.

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This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.