Friday, 30 September 2016

Brazil launches consultation on MAP rules

Brazil’s tax authorities and the Ministry of Finance jointly released a public consultation document on 18 August 2016 that aims to provide guidance on the operation of the mutual agreement procedure (MAP) in the context of Brazil’s 32 existing tax treaties, and to implement the OECD recommendations under action 14 of the BEPS project (Making Dispute Resolution Mechanisms More Effective).

To date, Brazil’s tax authorities have not issued any internal rules or guidance on the MAP. The consultation document, which contains the text of a new normative ruling (NR), would provide more transparency to better enable taxpayers to enjoy the benefits of existing tax treaties, and it would reinforce Brazil’s commitment as a G20 member to set minimum standards in this area.

The consultation document provides guidance on the requirements and criteria for Brazilian taxpayers to invoke the MAP in a relevant tax treaty to resolve treaty-related disputes. It also includes a form that would have to be used to initiate the MAP procedure and to request any corresponding tax refund. Under Brazil’s treaties, the MAP may be invoked only with respect to Brazil’s corporate income tax and social contribution on net profits and the foreign taxes identified in the treaty.

The deadline for submitting a MAP request to the Brazilian tax authorities would be five years (except under the treaties with Argentina, Belgium, Ecuador and Portugal, where the deadline is two years, and under the treaties with China and Finland, where the deadline is three years) from the date the taxpayer considers that the relevant actions result, or would result, in taxation not in accordance with the treaty. Any refunds previously claimed would have to be included in the MAP request. Cases that already have been decided by an administrative or judicial court, as well as taxes that fall outside the statute of limitations period, would not be eligible for the MAP.

Source: Deloitte