Page 104 - InvestmentGuideBrasilEng

TAXES ON FOREIGN CAPITAL
REGISTERING FOREIGN Foreign capital that enters Brazil as FDI is not

NO RESTRICTIONS sectors, foreign capital may be subject CAPITAL subject to any taxation. However, intercompany
? Restrictions – in the following
loans will be subject to the federal Tax on Credit,
ON MOST FDI to limitations or may require pre- Investors are required to register all inflows of for- Foreign Exchange, Bonds and Securities Transac-
tions and on Insurance Operations (IOF ) at a rate
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authorization from public authorities:
eign capital into Brazil with the Brazilian Central (which can be reduced to 0%) that varies depend-
Foreign capital may freely enter Brazil and is not » Acquisition or rental of rural property Bank within 30 days of the funds entering Brazil. ing on the sector, the length of investment and
subject to prior approval by the government and (may require authorization from the This can only be done online through the Brazil- other aspects. Even though intercompany loans
there are no conditions in respect of the total National Institute for Colonization and ian Central Bank’s e-registration tool, RDE-IED are classified as FDI, The Federal Revenue Service
amount of investment that can be made in Brazil, Agrarian Reform - INCRA or, in the case of (Electronic Declaration Registry), which is part of (SRF ) considers this kind of investment a normal,
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with a small number of exceptions: large purchases, the National Congress); the Brazilian Central Bank’s Information System interest-bearing financial transaction that is sub-
(SISBACEN). ject to the same IOF rates as domestic investors.
? Prohibitions: » Financial institutions; The recipient company of FDI and the foreign The remittance of profits and dividends and
investor (through a representative) are responsi- the repatriation of the foreign capital abroad are
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» Activities involving nuclear energy; » Air transportation companies (the operation ble for registration. exempted from the Withholding Income Tax (IR )
of passenger air transportion services is subject An unregistered investment is not eligible for when leaving Brazil. But this only applies if the
» Healthcare services (unless an exception to concession – under current legislation a repatriation and dividends or profits generated by sum of the capital to be sent abroad is the same
is expressly provided for by law); concession contract can only be awarded to it cannot be remitted abroad through the com- as the sum that was registered with the Brazilian
Brazilian-registered companies in which at mercial foreign exchange market. Central Bank. Capital repatriated in an amount
» Mail and telegraph services; and least 80% of the voting capital is in the hands However, it is important to note that nothing greater than the initial amount registered will be
of Brazilians – entry of foreign capital is capped prevents the foreign investor from repatriating deemed a capital gain and be subject to a 15% or
» Aerospace (launch and deployment at 20% of ordinary shares in the company); or remitting dividends or profits abroad through 25% IR, unless otherwise provided by an applica-
of satellites, vehicles, aircraft or the the floating exchange market or transferring local ble tax treaty between Brazil and the other coun-
commercialization of these goods, » Media, including television networks, currency abroad to purchase foreign currency out- try involved.
but the prohibition does not apply to magazines, newspapers and radio side Brazil. When remittance or repatriation is not desir-
manufacturing or trading these goods). broadcasting stations (the government Apart from the aspects relating to registra- able, reinvesting profits is an option. Reinvest-
prevents foreign investment in the ownership tion, repatriation and certain tax consequences, ment can be registered as foreign capital with the
and administration of media – legislation an unregistered investment is subject to the same Brazilian Central Bank, thereby increasing the tax
stipulates that at least 70% of the total capital rules applicable to registered investments. basis for calculating future divisions of capital.
of media companies must be owned directly More information on registering foreign cap- Finally, to stimulate FDI, Brazil has signed
or indirectly by Brazilians born in Brazil or ital can be found in Portuguese from the Brazil- Double Taxation Treaties (DDTs) with 28 coun-
naturalized for more than ten years); and ian Central Bank’s website: www.bcb.gov.br/pre/ tries. Check each convention document in
portalcidadao/cadsis/rde.asp?idpai=portalbcb its entirety at http://www.receita.fazenda.
» Mining sector. A user guide to the Electronic Declaration gov.br/Legislacao/AcordosInternacionais/
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Registry, also in Portuguese, is available from the AcordosDuplaTrib.htm .
Brazilian Central Bank’s website: www.bcb.gov.
br/?RDEIED. 5 Acronym in Portuguese.
4 Acronym in Portuguese. 6 Acronym in Portuguese.
7 Acronym in Portuguese.
8 In Portuguese only.
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