Keywords: COFIS Executive Declaratory Act, taxation, Brazil

COFIS Executive Declaratory Act (ADE) No. 60/2015, published in the Official Gazette on August 28th, 2015, approved the new Manual for Completion of the Tax and Account Digital Bookkeeping (ECF) and included the Return created by Provisional Measure No. 685/2015.

The Return of Information related to Relevant Transactions ("DIOR"), previously called "Return of Tax Planning – DPLAT" by the Brazilian Federal Revenue Service, was included in Forms Y700, Y710, Y720 of the ECF.

Among the information that has to be provided by means of the DIOR, we highlight:

  • Period of the group of transactions that contains acts or facts related to the DIOR;
  • Calendar years relating to the savings expected by the acts and facts reported in the DIOR;
  • Transactions between dependent or independent legal entities located in Brazil or abroad, with the indication of the tax status of any foreign entity – e.g., if the foreign entity is located in a tax heaven or in a jurisdiction with a privileged tax regime, as defined by Brazilian tax laws;
  • Any corporate restructuring;
  • Creation of deferred assets, liabilities with third parties or asset reductions;
  • Reduction of the calculation basis of any tax levied in Brazil as a result of transfers overseas; and
  • Brief description of the facts, legal basis and business purpose of the group of transactions reported in the DIOR.

In addition, all federal taxes involved in the tax planning have to be indicated in the DIOR according to the List contained in Form Y710, as follows:

  • IRPF – Individual Income Tax;
  • IRPJ – Corporate Income Tax;
  • CSLL – Social Contribution on Net Profits;
  • WHT – Withholding Tax;
  • PIS and COFINS – Taxes on Revenues;
  • IOF – Tax on Financial Transactions;
  • Import and Export Taxes;
  • Simplified Federal Tax Regime ("Simples Nacional");
  • Social Security Contributions;
  • CIDE-Fuels - Contribution on the Economic Domain based on fuel;
  • IPI – Tax on Industrialized Products; and
  • Other taxes.

It should be noted that the Federal Revenue Service's Secretary, Mr. Jorge Rachid, informed, during an event held with taxpayers, that the above mentioned Return would only be compulsory from 2016 onwards, in respects of the group of transactions carried out in calendar year 2015, and the Normative Ruling required by MP No. 685/2015 for the actual implementation of such Return is yet to be submitted to public consultation.

Accordingly, the Manual establishes that the completion of these Forms relating to the DIOR is optional for all taxpayers in relation to ECF 2015.

Originally published 2 September 2015

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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.