Originally published in the March 19 edition of World Tax Daily (Copyrights Tax Analysts – www.taxanalysts.com)
Brazil has finally waived currency coverage for exports, allowing exporters of goods and services to keep 100 percent of export income outside Brazil.
The waiver came through Brazilian National Monetary Council’s (Conselho Monetário Nacional, or CMN) Resolution 3,548/2008, published in Brazil’s official gazette on March 14. This resolution changes Resolution CMN 3,389 of August 4, 2006, which reduced currency coverage for exports from 100 percent to 70 percent.
Taxpayers are no longer required to bring export income into Brazil. However, it is unclear if taxpayers still must follow Joint Ordinance 1,064 of October 30, 2006, issued by the Federal Revenue Department and the Central Bank, which requires the Central Bank to disclose to the Federal Revenue Department information about exporters’ export income kept outside Brazil. Among the required data are:
- the taxpayer’s corporate or personal name and tax ID number;
- amounts of foreign currency consolidated monthly, by currency and nature of the transaction;
- amounts in Brazilian currency consolidated monthly by nature of transaction; and
- the name and tax ID number of the financial institution in charge of the exchange transaction.
If a taxpayer elects to keep 100 percent of export income outside Brazil, many reporting requirements in Joint Ordinance 1,064/2006 and Resolution CMN 3,389/2006 would seem not to apply anymore, which may impair the Federal Revenue Department’s ability to access taxpayers’ information on currency kept outside the country.
Although Resolution 3,548/2008 is recent, the Federal Revenue Department may not have considered the impact of the resolution on the reporting requirements created by Joint Ordinance 1,064/2006. It is also possible that new tax regulations might be issued to require taxpayers to make additional reports on export income kept outside Brazil.
David Roberto R. Soares da Silva