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Brazil Tax: New controls introduced on remittances abroad

The Brazilian tax authorities published a Normative Instruction (IN 1033/10) on 14 May 2022 that requires the reporting of payments made outside Brazil, regardless of whether the payments would be subject to withholding tax.

According to the instruction, all Brazilian resident entities and individuals that make payments or credits to a nonresident must report the transaction to the tax authorities if the remittance exceeds BRL 53,969.40 (approximately USD 30,000). Payments that fall within the scope of the instruction include investments in funds that trade external debt, royalties and technical assistance fees, interest and commissions, interest on net equity, rents and leases, financial investments, international freight, profits and dividends, remuneration of rights, etc.

The information must be submitted to the tax authorities using a program called "DIRF" (withholding tax return) that will be made available on the website of the Brazilian tax authorities. The DIRF is an annual declaration primarily used to inform the tax authorities of amounts paid or credited that were subject to withholding tax, and contributions at source. The DIRF must be submitted by 28 February 2022 for calendar year 2010. Penalties will be levied for noncompliance.

The new tax measure is the latest in a series of steps taken by the Brazilian tax authorities to facilitate cross checking of the amount of tax and contributions paid by Brazilian taxpayers and is in line with the government's policy to monitor the inflow and outflow of payments, under which the government is introducing the Integrated System of Foreign Trading Services (Siscoserv).
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