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Text on profit taxation will be analysed by CARF

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The Administrative Council of Tax Resources (Carf) will receive 45 texts for analysis in August. Among these, two summary proposals stand out, the first being on the taxation of profits in Brazil, despite the existence of an international treaty that bars double taxation, and the second on the simultaneous collection of isolated and ex-officio penalties.

In the event of approval by the Plenary of Carf, this will be the Council’s final answer, and therefore should not be taking these issues into consideration again. These summaries may still become mandatory for the entire administration at the federal public level, if so decided by the Minister of Economy, Paulo Guedes. In this way, the Internal Revenue Service would comply with the understandings defined by Carf.

The 26th proposal for a summary discusses the subject of treaties. According to the text, international agreements and conventions observed by Brazil to prevent double taxation, that follow the proposal by the United Nations (UN) or by the Organization for Economic Cooperation and Development (OECD), do not bar the the taxation of profits earned by the parent company in Brazil that are mediated by subsidiaries abroad.

On the other hand, the proposal for summary nº 24 determines that in the absence of payment of monthly estimates, an isolated fine may be applied, from the adoption of MP nº 351 (converted into Law nº 11.488, of 2007), simultaneously with the ex-officio fine that applies on the total or difference of tax or contribution when there is no payment or payment, absence of declaration and declaration that is not accurate.

The text distances itself from Precedent No. 105, of 2007, which prevented the two penalties from being applied at the same time. The ex-officio fine is 75% and the isolated one is 50%. When added together, the values ​​under discussion are doubled.


Written by Aline Ribeiro, Content Consultant at Drummond Advisors