miércoles, 21 de junio de 2017

Brazil clarifies reporting obligation for cross-border transactions

The Brazilian tax authorities published guidance on 19 April 2017, clarifying that interest arising from loans and financing transactions between resident and nonresident companies (inbound and outbound) does not need to be reported in the SISCOSERV system (the integrated system of foreign trade in services, intangibles and other transactions).
The SISCOSERV is an online return introduced in 2011, in which Brazilian individuals and legal entities are required to report information on cross-border transactions involving services and intangibles, including intellectual property rights, to the government. The Brazilian service/intangible provider or acquirer is the party responsible for submitting the return, which includes information about the client/supplier, the value of the transaction, the currency, etc.
Penalties apply for noncompliance.
In September 2016, the tax authorities issued a private letter ruling in response to questions from a taxpayer concerning SISCOSERV reporting, concluding that interest arising from loans and financing transactions between resident and nonresident companies needed to be reported in the SISCOSERV system. According to the ruling, such transactions would fall under the Service and Intangible Code Registry (NEBS) classification for “Credit Concession Services.” (The NEBS provides codes for each specific activity subject to SISCOSERV reporting.)
Since all inbound cross-border loans must be registered in the online Brazilian Central Bank system, where information on the principal amount, interest rates, maturity terms, etc. is disclosed, the conclusions in the 2016 ruling came as a surprise to most taxpayers.
The new guidance, which applies as from the date of its publication, clarifies the reporting treatment for interest arising from cross-border loans – such interest need not be reported in the SISCOSERV system, and no penalties for noncompliance will apply in cases where the information on such interest was not reported in previous calendar years.

Source: Deloitte

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