• New Brazilian Rules on the Taxation of Profits Earned by Controlled Foreign Corporations
  • April 6, 2015 | Author: Alejandro Suarez
  • Law Firm: Procopio, Cory, Hargreaves & Savitch LLP - Austin Office
  • Controlled Foreign Corporation (CFC) regimes are used in many countries as a means to prevent erosion of the domestic tax base and to discourage residents from shifting income to jurisdictions that do not impose tax or that impose tax at low rates. On May 2014, the Brazilian government enacted a new law L. 12973/2014, that introduced a series of changes to the national tax system establishing new tax rules for CFCs, as well as a special incentive (tax exemption for profits accrued) for CFCs engaged in the exploration and extraction of oil and gas (the Brazilian parent or investor is exempt from tax in Brazil if conditions are met).