{"id":2455,"date":"2013-11-09T22:15:01","date_gmt":"2013-11-10T00:15:01","guid":{"rendered":"http:\/\/www.vivacquaadvogados.com\/transitional-tax-regime-normative-instruction-from-brazilian-tax-authority-1-397-2013\/"},"modified":"2018-04-19T11:15:29","modified_gmt":"2018-04-19T14:15:29","slug":"transitional-tax-regime-normative-instruction-from-brazilian-tax-authority-1-397-2013","status":"publish","type":"post","link":"https:\/\/www.vivacquaadvogados.com\/en\/transitional-tax-regime-normative-instruction-from-brazilian-tax-authority-1-397-2013\/","title":{"rendered":"TRANSITIONAL TAX REGIME: NORMATIVE INSTRUCTION FROM BRAZILIAN TAX AUTHORITY 1.397\/2013"},"content":{"rendered":"<p style=\"text-align: justify;\"><strong><span style=\"font-size: 14pt; font-family: 'Felix Titling'; color: #2b673f;\">TRANSITIONAL TAX REGIME: NORMATIVE INSTRUCTION FROM BRAZILIAN TAX AUTHORITY 1.397\/2013<\/span><\/strong><\/p>\n<p style=\"text-align: justify;\"><strong><span style=\"font-size: 11pt; font-family: Arial, sans-serif;\">In 2008 Brazilian Accounting Standards were aligned with IFRS. The so- called Transitional Tax Regime ( &#8221; RTT &#8221; in Portuguese Language) was introduced in 2009 by Law 11.941\/2009, defining that, for tax purposes, companies should record its revenues, costs and expenses in accordance with the accounting rules in effect before conversion to IFRS.<\/span><\/strong><\/p>\n<p style=\"text-align: justify;\"><strong><span style=\"font-size: 11pt; font-family: Arial, sans-serif;\">Below the main changes introduced by the <!--more-->  Normative Instruction:<\/span><\/strong><\/p>\n<ul style=\"text-align: justify;\">\n<li><span style=\"font-size: 11pt; line-height: 115%; font-family: Wingdings;\">\u00d8<\/span><strong><span style=\"font-size: 11pt; line-height: 115%; font-family: Arial, sans-serif;\">Bookkeeping Tax ( &#8221; ECF &#8221; in Portuguese Language ) : A new accessory obligation was introduced and will be delivered in June 2015 compared to fiscal year 2014. Such accessory obligation is the digital version of the financial statements prepared in accordance with accounting rules in force prior to the conversion to IFRS.<\/span><\/strong><\/li>\n<\/ul>\n<ul style=\"text-align: justify;\">\n<li><span style=\"font-size: 11pt; line-height: 115%; font-family: Wingdings;\">\u00d8<\/span><strong><span style=\"font-size: 11pt; line-height: 115%; font-family: Arial, sans-serif;\">Digital Bookkeeping Tax on Income Tax and Social Contribution on Net Income of Corporations ( &#8221; EFD &#8211; Income tax &#8221; in Portuguese Language ) : The Normative Instruction 1.397\/2013 introduced a more detailed filling in the \u201cEFD \u2013 Income Tax\u201d , whose requirement for the year 2014 was introduced by Normative Instruction 1.353\/2013 , published on May 2, 2013 . The submission of the \u201cEFD \u2013 Income Tax\u201d should occur in June 2015. In relation to activities undertaken in the year 2013, currently the existing accessory obligations&nbsp; must still be prepared and submitted in June 2014.<\/span><\/strong><\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><strong><span style=\"font-size: 11pt; font-family: Arial, sans-serif;\">Taxation of Dividends : Whereas the basis for the payment of dividends is net income calculated based on the new Brazilian Accounting Rules (aligned to IFRS) and the payment &nbsp;of dividends is exempt in Brazil ( Law 9.249\/95 , article 10 ) , the \u201cAttorney General of the National Treasury\u201d issued the Legal Opinion &nbsp;n\u00b0&nbsp; &nbsp;202\/2013 , &nbsp;clarifying &nbsp;that &nbsp;the &nbsp;exemption &nbsp;to &nbsp;the&nbsp;<\/span><\/strong><strong style=\"font-size: 14px; line-height: 115%; text-align: justify;\"><span style=\"font-size: 11pt; line-height: 115%; font-family: Arial, sans-serif;\">payment of dividends only applies to the amount of dividends calculated in accordance with the&nbsp; Accounting Standards Rules in force in 2007. The Normative Instruction 1.397\/2013 confirmed the understanding of the \u201cAttorney General of the National Treasury\u201d setting the tax applicable to dividends potentially paid in excess of the profit for tax purposes , as follows :<\/span><\/strong><\/p>\n<ol style=\"list-style-type: upper-roman; text-align: justify;\">\n<li><strong><span style=\"font-size: 11pt; line-height: 115%; font-family: Arial, sans-serif;\">a)<\/span><\/strong><strong><span style=\"font-size: 11pt; line-height: 115%; font-family: Arial, sans-serif;\">Individuals Residents in Brazil &#8211; Individual Income Tax will apply to the progressive rate ( 7.5 % to 27.5 % )<\/span><\/strong><\/li>\n<\/ol>\n<ol style=\"list-style-type: upper-roman; text-align: justify;\">\n<li><strong><span style=\"font-size: 11pt; line-height: 115%; font-family: Arial, sans-serif;\">b)<\/span><\/strong><strong><span style=\"font-size: 11pt; line-height: 115%; font-family: Arial, sans-serif;\">Brazilian Legal Entities &#8211; the dividends in excess of the calculated profit for tax purposes should be included in taxable income calculation basis, subject to regular income tax and social tax (the combined rate is 34 % for companies in general and 40 % for financial institutions, insurance and entities regulated by the Central Bank of Brazil) and<\/span><\/strong><\/li>\n<\/ol>\n<ol style=\"list-style-type: upper-roman; text-align: justify;\">\n<li><strong><span style=\"font-size: 11pt; line-height: 115%; font-family: Arial, sans-serif;\">c)<\/span><\/strong><strong><span style=\"font-size: 11pt; line-height: 115%; font-family: Arial, sans-serif;\">Non- resident &#8211; Income Tax Withheld at- will be due at the rate of 15 % ( 25 % in cases where the remittance is made <\/span><\/strong><strong><\/strong><strong><span style=\"font-size: 11pt; line-height: 115%; font-family: Arial, sans-serif;\">to jurisdictions considered&nbsp; \u201ctax havens&#8221; )<\/span><\/strong><\/li>\n<\/ol>\n<ul style=\"text-align: justify;\">\n<li><span style=\"font-size: 11pt; line-height: 115%; font-family: Wingdings;\">\u00d8<\/span><strong><span style=\"font-size: 11pt; line-height: 115%; font-family: Arial, sans-serif;\">Interest on Capital (\u201cJCP\u201d on Portuguese Language): As already confirmed by Brazilian Tax Authority the basis for calculating the deductible interest on capital is the company&#8217;s stockholders equity calculated based in the Accounting Standards effective in 2007 (before conversion to IFRS).<\/span><\/strong><\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><strong><span style=\"font-size: 11pt; font-family: Arial, sans-serif;\">In practice this instruction requires the company to produce two Balance Sheets: (i) one based on IFRS and (ii) another based on old rules, for the purposes for calculating taxes.<\/span><\/strong><\/p>\n<p style=\"text-align: justify;\"><strong><span style=\"font-size: 11pt; font-family: Arial, sans-serif;\"><strong><span style=\"font-size: 11pt; font-family: Arial, sans-serif;\">Additionally, the Normative Instruction 1.397\/2013 emphasizes that the premium on issue of debentures , the investment grants and donations and investments valued by equity should be calculated based on the accounting standards in force before the conversion to IFRS.<\/span><\/strong><br \/><\/span><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>TRANSITIONAL TAX REGIME: NORMATIVE INSTRUCTION FROM BRAZILIAN TAX AUTHORITY 1.397\/2013  [&#8230;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2455","post","type-post","status-publish","format-standard","hentry","category-publications"],"_links":{"self":[{"href":"https:\/\/www.vivacquaadvogados.com\/en\/wp-json\/wp\/v2\/posts\/2455\/"}],"collection":[{"href":"https:\/\/www.vivacquaadvogados.com\/en\/wp-json\/wp\/v2\/posts\/"}],"about":[{"href":"https:\/\/www.vivacquaadvogados.com\/en\/wp-json\/wp\/v2\/types\/post\/"}],"author":[{"embeddable":true,"href":"https:\/\/www.vivacquaadvogados.com\/en\/wp-json\/wp\/v2\/users\/1\/"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vivacquaadvogados.com\/en\/wp-json\/wp\/v2\/comments\/?post=2455"}],"version-history":[{"count":1,"href":"https:\/\/www.vivacquaadvogados.com\/en\/wp-json\/wp\/v2\/posts\/2455\/revisions\/"}],"predecessor-version":[{"id":2456,"href":"https:\/\/www.vivacquaadvogados.com\/en\/wp-json\/wp\/v2\/posts\/2455\/revisions\/2456\/"}],"wp:attachment":[{"href":"https:\/\/www.vivacquaadvogados.com\/en\/wp-json\/wp\/v2\/media\/?parent=2455"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vivacquaadvogados.com\/en\/wp-json\/wp\/v2\/categories\/?post=2455"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vivacquaadvogados.com\/en\/wp-json\/wp\/v2\/tags\/?post=2455"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}