On August 2nd, 2013, the Minister of Finance regulated that 3.5 percent is the spread to be adopted to calculate the maximum interest rate that a Brazilian company may deduct from Corporate Income Taxes (IRPJ/CSLL) calculation bases, when the creditor is either an affiliated company domiciled outside Brazil, or a resident of a tax haven jurisdiction.
When the creditor is a Brazilian company and the debtor is either an affiliated company domiciled outside Brazil, or a resident of a tax haven jurisdiction, the applicable spread is 2.5 percent. For the period between January 2013 and August 2nd, 2013, this spread is reduced to zero.
The applicable spread must be added to the "basic" interest rates, which are the following:
- Brazilian sovereign bonds issued outside Brazil in USD for USD transactions with prefixed rate;
- Brazilian sovereign bonds issued outside Brazil in Brazilian Reais (BRL) for BRL transactions with prefixed rate; and
- London Interbank Offered Rate - LIBOR for 6 months, in other cases.
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.