LEGAL DEVELOPMENTS - BRAZIL
Brazilian Government 1 approves Tax Treaty
National Statute
For Small Companies
Real Estate
Activities Tax Return
Development Promotion Programme
Special Incentive
Regime on Infrastructure
Development
Investment Funds and Real Estate Credits
Investment Funds and Securities
Work Permits for Foreigners
Visa and work permits for foreigners under Transfer of
Technology and Technical Assistance Agreements
Opening of the Brazilian Insurance Market
TAX
Brazilian
Government Approves Tax Treaty
The Brazilian
government has enacted Decree no. 6,000, published on October 4, 2006, approving a tax
treaty between Brazil and Mexico for the avoidance of double taxation and the
prevention of tax evasion in connection with income
tax.
Corporate Law
National Statute for Small Companies
On December 15, 2006, Supplementary Law
no. 123 (“SL 123”) was enacted establishing the National
Statute for Small Companies.
The SL 123 sets forth general rules
applicable to small companies in Brazil, mainly related to tax assessment and
collection, labour and social security obligations and access to credits and
markets.
SL 123 establishes the Special Taxation
Regime for the collection of the following taxes and contributions owned by
small companies, classed as “National Simples”: income tax, tax on industrial
products, contributions to the social integration programme, tax for social security
financing, contributions to social security and tax on circulation of goods
and services. The SL 123 is effective as from July 1, 2007.
Companies classed as “Federal Simples”
are registered automatically in the National Simples. In order to allow companies
that are in debt with the Federal Revenue to register, debts can be paid in up
to 120 instalments.
In the labour and social security area,
small companies are exempt from some obligations, as the obligation to
register apprentices with the Apprentice National Services courses.
REAL ESTATE
Real Estate Activities Tax Return
On
December 15, 2006, the Brazilian Federal Revenue, published Ruling No. 694
(“NR 694”), which sets forth the procedure to file the Real Estate Activities
Tax Return (“REATR”).
As a
general rule, companies in the real estate business must submit the REATR. NR
694 provides that the following transactions must be included in the REATR:
construction projects, mergers, allotments, intermediation relating to acquisitions
and sales in the relevant year and a monthly description of the yearly
payments concerning leases, subleases and lease intermediation.
The
term to submit the REATR ends on the last business day of February subsequent
to the year to which the information refers. The form is submitted through a
programme called “Receitanet”, available at the Federal Revenue’s website.
INFRASTRUCTURE
Development Promotion Programme
Decree No. 6,025 (Decree 6,025),
published on January 22, 2007, has established the Development Promotion Programme
(“DPP”). The aim of the DPP is to stimulate growth in private
investment and public investments in infrastructure, in order to improve the
quality and control of public spending.
In connection with the DPP, Decree 6,025 sets
forth the following:
§
Measures to promote
development;
§
The supervisory role of
the DPP;
§
A committee - CGPA
members; and,
§
An executive group.
Special Incentive Regime on
Infrastructure Development
The Provisional Measure No. 351 (“PM
351”), published on January 22, 2007, modifies the current tax law and introduces
the Special Incentive Regime on Infrastructure Development (“SIRID”).
According to the PM 351, the SIRID promotes
projects that have been approved for the implementation of infrastructure
works in the following areas:
§
Transport,
§
Harbours,
§
Energy, and
§
Basic sanitation.
Companies participating in the Integrated
System of Tax Payment for Small Companies – known as “Simples or National
Simples” - cannot participate in the SIRID.
The PM
351 sets forth that if a company is engaged in the sale or importation of new
machines, apparatus, instruments, equipment and construction materials to be
used in infrastructure works, the following contributions are suspended:
(i)
The tax on social security financing (“TSSF”) and Social Integration
Programme (“SIP”) in relation to inside market sales, when such goods
or construction materials are acquired by a company that participates in SIRID;
(ii)
The importation through the SIP and TSSF regime, when such goods or
construction materials are directly imported by a company that participates
in the SIRID.
In
connection with services and importations for infrastructure works, the
following contributions are suspended:
(i) Any
SIP and TSSF events in relation to services rendered by companies with
headquarters in Brazil that take part in the SIRID; or
(ii)
The importation through SIP and TSSF in relation to services directly
imported by companies participate in the SIRID.
The PM 351 sets forth that companies may apply
for a discount, within a term of 24 months as from the granting of SIP and
TSSF credits for:
(i) construction of and improvements to
third party real estate, when the cost, including manpower, is assumed by the
lessee; and
(ii) construction of and improvements to
its own real estate or the real estate of third parties, when any such constructions
are incorporated in the fixed asset, acquired or constructed to render services.
The following amendments to the tax law can
be highlighted:
(i) the minimum term for the use of the SIP
and TSSF credits is reduced to 24 (twenty-four) months; and,
(ii) time-limit for the payment of tax
and other contributions is increased.
The time-limit for the payment of income
tax on interests and fees for credits obtained overseas to be used for
financing exports, is the tenth business day of the month subsequent to the
verification of such interests and fees, rather than the third working day of
the week subsequent to the verification.
Among other issues, the PM 351 also regulates:
(i) bills concerning voluntary assessment;
(ii) bills concerning taxpayers within the special controlling regime;
(iii) bills applicable
to non-payment events;
(iv) bills concerning
non-compensation; and,
(v) the incorrect use of accounts subject
to a 0% rate of provisional contribution on financial
transactions.
INVESTMENT FUNDS
Investment
Funds and Real Estate Credits
The Securities Commission Rule No. 446 (“Rule 446”),
which was published in the Official Gazette of the Federal Executive on 21
December, 2006, amended Securities Commission Rules Nos. 356 of 17 December
2001 (“Rule 356”) and 414 of 30 December 2004 (“Rule 414”). The
changes refer to the regulation of:
(i) the incorporation and operation of investment
funds in credit rights and of the investment funds in quotas of investment
funds in credit rights;
(ii) the publicly-held company’s securitisation
registry of real estate credit companies and public offering for the
distribution of real estate credit certificates.
Rule 446 states that any fund administrator that is
not authorised by the Securities Commission (“SC”) to render custody services
must contract an authorised institution to provide these services.
Rule 446 sets forth that the fund could be vested with
the credit rights and other assets of the debtor, within the percentage
limits of its net equity established in Rule 356, only if it is complied with
daily and based on the net equity of the fund from the previous working day.
Rule 446 provides that the participation of a dealer
institution in the public offering for the distribution of real estate credit
certificates is unnecessary if an amount of less than R$ 30,000,000.00 is
raised.
Furthermore, in relation to the corporate companies
that are responsible for more than 20% of the real estate credits related to
the issuance of real estate credit certificates, the participation of a
dealer institution is not necessary in transactions where these certificates:
(i) are the subject to a public offering of
distribution that is directed exclusively to companies of the same economic
group, its respective directors and controlling shareholders; or,
(ii) have a value equal to or greater than R$
1,000,000.00 and are the object of a public offering aimed at a subscription
of 20 or less investors.
Investment Funds and Securities
The Securities Commission Rule No. 442 ("SCI 442") was published
in the government’s official daily newspaper on 11 December 2006. The ruling has introduced
changes to the regulation of:
(i) the incorporation and operation of investment funds in credit
rights and in investment fund accounts in credit rights;
(ii) public offering of distribution of the securities in primary and
secondary markets, established in Rule No. 356, 17 December 2001 and in Rule No.
400, of 29 December, respectively.
The main amendments introduced by SCI 442 were as follows:
(i) clarifications to the definition of credit rights;
(ii) the automatic registration by the Securities Exchange Commission
("CVM");
(iii) the liquidation of closed-end investment fund by the CVM;
(iv) information that must be provided by the administrator to the
CVM;
(v) the service agreement to third parties by an administrative
institution not authorized by the CVM;
(vi) the public offering of distribution of quotas of closed-end
investment funds;
(vii) the distribution of quotas of open-end funds;
(viii) the acquisition of credit rights granted or originated by
companies controlled by the public sector;
(ix) obligation to elaborate a prospectus;
(x) the removal from the classification of classes or series of
quotas by classifier risk agency operating in Brazil in the public offerings
of distribution of quotas;
(xi) the regulation of funds;
(xii) custodian’s activities;
(xiii) hiring of services;
(xiv) disclosure obligations;
(xv) investment funds in credit rights;
(xvi) the independent auditor’s report on the projections relating
to the liquidation of the fund; and,
(xvii) the cancellation of the registration of the fund after the distribution
of assets.
IMMIGRATION
Work Permits
for Foreigners
On February 13, 2007, Ruling No. 74 of
the National Council on Immigration (“NR 74”) was published with a
view to establishing the procedure for foreigners to obtain a work permit.
If a company is interested in hiring a foreign
worker, the following documents must be submitted to the General Immigration Office
of the Ministry of Labour (i) documents relating to the company and the
foreign worker, and (ii) a work permit application form (provided in the NR 74).
The authorization for the foreign worker
to become an employee of a company within the same group will be awarded if
the salary to be paid in Brazil is not below to the salary paid abroad.
In the event the foreign worker is
relocated to another company within the group, the assignee of the transaction
must communicate it and justify it to the Ministry of Labour within the
following 15 days.
NR 74 came into force on the date it was
published. It repealed Administrative Ruling No. 07, of October 6, 2004.
Visas and
Work Permits for Foreigners under Transfer of Technology and Technical
Assistance Agreements
Ruling No. 73, enacted by the National Council
on Immigration (“NR 73”), published on February 13, 2007, modifies
Ruling No. 61, on visas and work permits for foreigners - who do not have an
employment relationship - under transfer of technology and technical
assistance agreements.
According to NR 73, applications for work
permits and temporary visas to the Ministry of Labour must include a detailed
training plan, indicating the number of Brazilians to be trained, the purpose
and means of implementation, the term and the expected results.
Furthermore, NR 73 states that in order
to grant new work permits or extend the existing ones, the requirements
mentioned above must also be met.
INSURANCE MARKET
Opening
of the Brazilian Insurance Market
On January 16, 2007, the Brazilian
federal government published Supplementary Law No. 126 (“SL 126”), to
regulate new insurance policies issued in Brazil. The main novelty introduced
by SL 126 is the possibility of foreign companies participating in the
Brazilian reinsurance market.
Until the publication of SL 126, the
reinsurance market was monopolized by the state-controlled company IRB-Brasil Resseguros S.A. (“IRB”). The opening of the Brazilian reinsurance market (i) may strengthen the economical and financial potential of insurance companies,
stimulating competition among them.
Moreover, the end of
IRB’s monopoly will probably increase the number of reinsurance offers made
to Brazilian insurance companies and, consequently, the price of the premiums
will probably drop accordingly.
© DIAS CARNEIRO ADVOGADOS
Al. Santos 2224
Tel +55(11) 3898 1642
Fax +55(11) 3898 1646
01418 - 200 São Paulo
(Brazil)
If you have any queries regarding this Newsletter
(re: registrations, cancellations, problems
viewing the pages) please send an e-mail to: circulardiascarneiro@dcadv.com.br
|
