Brazil signs Double Tax Treaties with Singapore and Switzerland

Autor: Francisco Lisboa Moreira
10/07/2018 Imprimir Enviar E-mail

Last May Brazil signed double tax treaties with both Singapore and Switzerland. Although singed at the same month, they are contextualized differently.

Negotiations for the Swiss treaty date back to 2015, when the Swiss foreign affairs minister visited to express the considerable concern of Swiss multinationals investing in Brazil on account of Brazil listing certain Swiss structures as Privileged Tax Regimes, informally known as the grey list. The Brazil-Switzerland tax treaty reflects that history, as well.

In relation to Singapore, in December 2017 Brazil removed Singapore from its Low Tax Jurisdiction List, informally known as black list, and included Singapore’s concessionary tax regimes at its Privileged Tax Regime list, the so-called grey-list, for regimes that bear an effective tax rate below Brazil’s 20 percent threshold (even though the “Portaria” – a Normative Act – from the Ministry of Finance placed the threshold tax rate for a regime or dependency to be considered as a privileged at 17%).

These actions improved the conditions for bilateral investment into Brazil while the grey-listing counter-measure aimed to create an equilibrium between the countries’ tax regimes.

We should recap, first, the Brazilian request to join the OECD. The Swiss treaty incorporates some provisions from the OECD/G20 base erosion profit shifting project, which are a direct result of that effort.

Brazilian businesses that seek to benefit from Singapore concessionary tax rates should evaluate properly their tax exposure because popular Singapore tax incentives related to shipping, trading, and aviation remain listed as privileged tax regimes.

Technical services

Both treaties introduce new Article 13 on fees for technical services and the content is exactly the same. The treaty articles are inspired by Article 12-A of the United Nations model treaty, granting taxing rights on technical services to source countries.

Exchange of information

Article 27 of the Brazil-Singapore tax treaty, concerning exchange of information (EOI), follows Article 26 of OECD treaty model.

The corresponding exchange of information article of the Swiss tax treaty also follows the OECD tax treaty model.

Brazil and Switzerland previously signed a treaty providing for exchange of information which was approved by the Brazilian House of Representatives on September 21, 2017. The treaty has been sent to the Senate for the final approval.

Treaty abuse

Both treaties contain an “Entitlement to Benefits Clause.” In general terms, the clause can be seen as an effort by the Brazilian tax authorities to deny tax treaty benefits in situations seen as abusive or exceeding the intent of the treaty. The provision could give rise to court disputes in the future.

Entry into force

The treaties still need to be ratified at the Brazilian Congress. However, in the context of the as the speedy signature was a surprise, it may be that ratification will be speedy as well.




© 2014 Bichara Advogados

Luiz Gustavo A. S. Bichara

bichara@bicharalaw.com.br Idiomas

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Luiz Gustavo A. S. Bichara

bichara@bicharalaw.com.br Idiomas

Área de atuação

Consultoria e Contencioso Cíveis e Contratos

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Donec in ligula id sem tristique ultrices eget id neque. Duis enim turpis, tempus at accumsan vitae, lobortis id sapien. Pellentesque nec orci mi, in pharetra ligula. Nulla facilisi. Nulla facilisi. Mauris convallis venenatis massa, quis consectetur felis ornare quis. Sed aliquet nunc ac ante molestie ultricies. Nam pulvinar ultricies bibendum. Vivamus diam leo, faucibus et vehicula eu, molestie sit amet dui. Proin nec orci et elit semper ultrices. Cum sociis natoque penatibus et magnis dis parturient montes, nascetur ridiculus mus. Sed quis urna mi, ac dignissim mauris. Quisque mollis ornare mauris, sed laoreet diam malesuada quis. Proin vel elementum ante. Donec hendrerit arcu ac odio tincidunt posuere. Vestibulum nec risus eu lacus semper viverra.

Luiz Gustavo A. S. Bichara

bichara@bicharalaw.com.br Idiomas

Área de atuação

Consultoria e Contencioso Cíveis e Contratos

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