The National Foreign Trade Council (NFTC) is urging Brazil to include safe harbors in its draft law for implementing a 15% global minimum tax.
In October, Brazil introduced a Provisional Measure aimed at amending the Social Contribution on Net Income (CSLL) tax to establish this minimum tax. In an October 31 letter, the NFTC noted that the draft law did not incorporate safe harbors outlined in previous administrative guidance from December.
They emphasized that these provisions are essential to prevent double taxation and reduce compliance burdens for multinational enterprises (MNEs) demonstrating adherence to the 15% rate. The minimum tax rules offer a transitional safe harbor allowing companies to use existing country-by-country reporting data to calculate their tax rates.
This global minimum tax, part of the OECD’s Pillar Two initiative, targets multinational companies with revenues exceeding 750 million euros ($813 million). The NFTC’s letter highlighted the high compliance burden of the new GloBE return and stressed the need for time to adjust systems to meet these requirements, with safe harbors serving to alleviate some of these challenges.
To read the Letter addressed by the National Foreign Trade Council, click here.
Brazil’s tax authority, Receita Federal, is seeking public feedback on updating transfer pricing rules expected to enter into force in 2025. The call for consultations follows the process of Brazil’s adherence to international standards which includes the country’s tax law adaptation of the arm’s length concept in 2024.
The input required concerns calculating intra-group transactions and the process for establishing Advanced Pricing Agreements, which are binding agreements, between the taxpayer and the tax authority, regarding transfer pricing methodologies for specific transactions over a fixed timeframe.
The tax authority accepts comments on the proposed regulations until 30 September 2024.