BY: GREGORY T. BRYANT
On February 27, 2013, the Brazilian tax authority, Secretaria da Receita Federal do Brasil (the “Tax Authority”), published guidance regarding the reporting obligations for certain transactions between Brazilian residents and non-residents. The guidance, Normative Instruction No. 1.336/2013 (“IN 1.336”), modifies the deadlines for reporting these transactions and the penalties for non-compliance.
Prior Law
In June 2012, the Tax Authority introduced Normative Instruction 1.277/2012 (“IN 1.277”), which imposed reporting obligations on Brazilian residents and legal entities who entered into transactions with non-residents (i) to provide or receive services; (ii) to dispose of or acquire intangibles; or (iii) where the transaction may change the net equity or wealth of the Brazilian resident.
The penalty for filing late or not at all was BRL 5,000 for each month (or its fraction) until the Brazilian resident was brought into full compliance. IN 1.277 also imposed a penalty equal to 5 percent of the value of the transaction for filing incorrect or incomplete returns.
The New Guidance
IN 1.336 provides new rules regarding the deadlines for reporting these transactions and modifies IN 1.277 on several points regarding the penalties. The new rules are effective immediately. The key modifications to IN 1.277 are as follows: