International Tax Newsletter - November 2022

Brazil has already issued 300 Digital Nomad visas for foreigners to live in the country →

The Brazilian government has already issued around 300 visas to foreigners who want to live in Brazil as digital nomads, since January of this year, the month this type of visa was launched. The visa modality, created for those who are from another country but want to spend a year in Brazil working remotely, was established by resolution 45 of the National Immigration Council and regulated in January of this year.

With the document in hand, foreigners can live in Brazil for one year, with the possibility of renewal after the end of the term, provided that the interested party proves an employment relationship with an employer abroad that authorizes remote work and has monthly income. of at least USD 1,500 or a bank balance of USD 18,000.

The request can be made in two ways: at Brazilian consulates abroad or at representations of the Ministry of Justice within the country. By mid-October, the Ministry of Foreign Affairs of Brazil (Itamaraty) had approved 225 requests, according to a survey carried out by the ministry. The countries where there were more requests for the Brazilian visa were the United States, England, France and Germany.

Federal Revenue of Brazil creates forum for dialogue in the area of tax and customs administration

The Federal Revenue of Brazil created the Tax and Customs Dialogue Forum (FATA), a communication channel with taxpayers to help with tax compliance. The institution of the Forum is contained in Ordinance #253, published in the Official Gazette.

The purpose of the measure is to establish a permanent channel of dialogue and relationship between business and professional entities and the federal tax authorities, in order to collaboratively develop demands for greater integration, not only with taxpayers, but with society as a whole.

FATA, which has a consultative and permanent nature, is a continuation action to build an environment of consensus within the scope of the Federal Revenue and becomes an operational and regulatory framework for tax compliance.

Brazil and Norway Sign Tax Treaty 

On November 4th, 2022, Brazil and Norway signed an income tax treaty, in Brazil. Once in force and effective, the new treaty will replace the Brazil - Norway Income and Capital Tax Treaty (1980), as amended by the 2014 protocol. The new treaty is in line with the latest international standards, following the OECD Convention and BEPS standards.

Bill that creates the Taxpayer Defense Code and provides for discounts in tax disputes is approved in the Chamber

The Chamber of Deputies approved a bill that creates the Taxpayer Defense Code. The proposal now goes to the Senate.

One of the objectives of the text, which had 301 votes in favor and 106 against, is to value the so-called "good payers".

The proposal establishes, for example, that the good payer category be used to grant discounts and more favorable conditions for the resolution of tax disputes. The Public Treasury may also, according to the text, prioritize the analysis of administrative processes of good payers, as well as the return of credits from that taxpayer.

The proposal provides for progressive fine discounts for the debtor, including default interest, which may be:

• 60%, if payment occurs within the period for filing the objection;
• 40%, if the payment occurs during the course of the administrative process in the first instance until the end of the period for filing the voluntary appeal;
• 20%, in other cases, provided that the payment is made within 20 days after the definitive constitution of the tax credit.

Extended for 60 days Provisional Measure that eliminates the income tax rate for foreigners 

The Provisional Measure (MP) was extended in Congress for another 60 days, which eliminates the Income Tax (IR) rate for foreigners or residents abroad on income from certain investments made in Brazil.

The decision was published in the Official Gazette (DOU) and also points to the postponement of the deadline for the MP that reduces the IR on remittances made to cover travel expenses outside the country. The measures had been sent by the President of the Republic, Jair Bolsonaro, to the Legislative at the end of September and, as they have not yet been voted on, they would lose their validity.

The first MP withdraws the collection of IR on income obtained from debentures and financial bills issued by companies, banks and national credit unions and distributed in Brazil to foreign investors or residents abroad. The zero rate also extends to income earned in Investment Funds in Infrastructure Participation (FIP-IE), Investment Funds in Participation in Intensive Economic Production in Research, Development and Innovation (FIP-PD&I).

In the case of remittances, the text reduces the rate of the Withholding Income Tax (IRRF) on the amounts intended to cover personal expenses, abroad, of individuals, on trips or on official missions.

The reduction applies to transfers with a limit of R$ 20,000 per month.

In 2023 and 2024, the IRRF rate will increase from 25% to 6%. In 2025, the tax will rise to 7%, 8% in 2026, and 9% in 2027.