Conteúdo

Tax havens and favored taxation countries – a change in definition

By Bruno Henrique Coutinho de Aguiar

On December 1, 2014, the Ministry of Finance issued an Ordinance changing the definition of ‘favored taxation countries’, i.e., countries and jurisdictions that are deemed tax havens or that offer certain businesses or individuals favored tax treatment.

Until November 30, 2014, ‘favored taxation countries’ would mean those countries where the maximum income tax rate is below 20% – in addition to other requirements.

But Ordinance No. 488 of 2014 changed such definition. Favored taxation countries are now those countries that tax income at a rate below 17%.

As a consequence, taxpayers must now consult their legal or tax departments and consultants to be fully aware of how such change will affect their tax basis, mainly with respect to transfer pricing rules.

 

 

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