Commission approves project to tax offshore profit

The Finance Committee of the Chamber of Deputies approved the bill (No. 3.489/2021) that establishes the taxation of profits with offshore companies by the IRPF, when the result is determined in the company’s balance sheet, even if it is not credited to the account.

The project is authored by the Executive Branch and was presented in 2021. The summary amends the legislation on income tax and earnings of any nature for individuals and legal entities and social contribution on net income.

Investments in assets abroad have become increasingly frequent in Brazil, factors such as economic instability and variations in the national currency contribute to attracting Brazilian investors to the foreign market.

Countries with favorable taxation such as the Cayman Islands, Panama and the British Virgin Islands  make many Brazilian citizens invest abroad through incorporated companies, companies that are known as “offshore companies”.

As a result, the use of this structure provides for the deferral of payment of Brazilian income tax on income obtained abroad. The approval of the bill revokes the offshore benefit and taxes profits at each end of the Balance Sheet.

Now, the project will go through the approval process of the Federal Senate.

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Important updates in BVI

The British Virgin Islands (BVI) Companies Act and the BVI Companies Regulations have been updated with important changes for 2023. Amongst them:

  • Abolition of Bearer Shares;
  • Dissolution and extinction of companies;
  • Mandatory waiver under AML/CFT laws;
  • Financial reports for BVI;
  • Expansion of the regime for the constitution of BCs;
  • Disclosure of the names of the directors of the companies;

Learn more about the changes at:

Written by Marcos Ferreira, Content Assistant to Drummond Advisors

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