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SISCOSERV New York 20 September 2012. Page 2 SISCOSERV | New York | 20 September 2012 Disclaimer ► Ernst & Young refers to the global organization of.

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Presentation on theme: "SISCOSERV New York 20 September 2012. Page 2 SISCOSERV | New York | 20 September 2012 Disclaimer ► Ernst & Young refers to the global organization of."— Presentation transcript:

1 SISCOSERV New York 20 September 2012

2 Page 2 SISCOSERV | New York | 20 September 2012 Disclaimer ► Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited located in the US. ► This presentation is © 2012 Ernst & Young LLP. All rights reserved. No part of this document may be reproduced, transmitted or otherwise distributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP. Any reproduction, transmission or distribution of this form or any of the material herein is prohibited and is in violation of US and international law. Ernst & Young LLP expressly disclaims any liability in connection with use of this presentation or its contents by any third party. ► Views expressed in this presentation are not necessarily those of Ernst & Young LLP.

3 Page 3 SISCOSERV | New York | 20 September 2012 Circular 230 disclosure ► Any US tax advice contained herein was not intended or written to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. ► These slides are for educational purposes only and are not intended, and should not be relied upon, as accounting advice.

4 Your presenters ► Gerrit Groen Ernst & Young LLP Director, Global Tax Desks ► Mariano Manente Ernst & Young LLP Brazilian Desk (LABC) International Tax Services ► Gilda Daumichen Ernst & Young LLP Brazilian Desk (LABC)

5 Page 5 SISCOSERV | New York | 20 September 2012 Cross-border transactions (payments from Brazil to the US) WHTCIDEPIS/COFINSISSIOF Software license w/source code 15%10%9.25%2%-5%0.38% Software license w/o source code 15%N/A9.25%2%-5%0.38% Technical services 15%10%9.25%2%-5%0.38% General services 25%N/A9.25%2%-5%0.38% Royalties 15%10%N/A2%-5%0.38% Lease 15%N/A 0.38% ► Payments from the US to Brazil usually are not subject to indirect/VAT taxes ► The Municipal Service Tax ISS, however, may apply in case the outcome of the services is verified within Brazilian territory Cross-border payment of intangibles Tax aspects

6 Page 6 SISCOSERV | New York | 20 September 2012 Cross-border payment of intangibles Tax aspects (cont.) ► Fees related to services and other intangibles are deductible for corporate income tax purposes at 34%, provided that the following conditions are met: ► Actually incurred ► Ordinary and necessary to the activities ► Supported by proper documentation ► When applicable, registration with the Brazilian Patent Office (INPI)

7 Page 7 SISCOSERV | New York | 20 September 2012 Cross-border payment of intangibles Tax audit environment ► Pre-SISCOSERV ► Cross-border payments highly taxed ► Taxation may vary depending on the nature of the transaction ► Payments were classified as general inbound and outbound service payment ► The lack of controls turns the tax inspection of such transactions into a lengthy process ► Post-SISCOSERV ► There is no additional tax obligation ► Transactions still highly taxed ► Introduction of detailed controls ► Shifting of the consuming work of classifying the services to Brazilian taxpayers ► Tax inspections should be easily implemented

8 Page 8 SISCOSERV | New York | 20 September 2012 SISCOSERV Overview ► Reporting requirement concerning the inbound and outbound transactions outlined in the Brazilian Codification NBS ► Services, intangibles and other transactions that create equity variations ► Includes transactions conducted abroad through subsidiaries, branches and controlled entities ► Includes long-term transactions not concluded until the implementation date provided in the statutory schedule (remainder) ► Applies irrespective of a written agreement, the liquidation of a currency exchange agreement or the payment mean ► Exceptions: ► Import and export of goods and intangibles associated with them, which are subject to registration with SISCOMEX ► Certain transactions in which the Brazilian party is classified as a micro/small business or a micro entrepreneur ► Transactions carried out by individuals concerning non-commercial activities up to US$20,000 per month ► Information to be provided by the Brazilian company through the electronic system SISCOSERV

9 Page 9 SISCOSERV | New York | 20 September 2012 NBS chapterDescriptionBeginning 1Construction services 1 Aug 12 7 Mail services including pick-up, remittance or delivery of documents (except letters) or of small objects, express remittance services (courier) 20Maintenance, repair and installation services (except construction) 3 Supply of food and beverage and accomodation services 1 Oct 12 13Legal and accounting services 14Other professional services 21Publications, printing and reproduction services 26Personal services 2Brokerage and merchandise distribution services 1 Dec12 10 Real estate services 18 Services of support to entrepreneurial activity 9Financial services and the like securitization of receivables and commercial fomentation 1 Feb 13 15IT services 4Passenger transportation services 1 Apr 13 5Load transportation services 6Services of support to transportation 11Operational leasing, intellectual property, franchising and exploration of other rights 1 Jul 13 12R&D services 25Recreational, cultural and sportive services 27Granting of intellectual property rights 8Power transmission and distribution services; water and gas distribution 1 Oct 13 17Telecommunication services, broadcasting and information disclosure services 19 Services of support to agricultural and cattle-raising activities, forestry, fishing, agriculture, mining, electricity, gas and water 22Educational services 23Services related to human health and social assistance 24Services of treatment, elimination and gathering of solid residues and other environmental services SISCOSERV Implementation schedule

10 Page 10 SISCOSERV | New York | 20 September 2012 SISCOSERV Acquisition module — imports ► RAS (Registro de Aquisicao de Servicos) ► Possible reporting ways: 1. Cross-border trade — acquisitions (e.g., services and intangibles) made by Brazilian residents from foreign residents 2. Consumption abroad — travel of Brazilian residents to take the service abroad 3. Commercial presence abroad — not applicable to the acquisition module 4. Temporary expatriation of individuals — travel of foreign residents to Brazil to render the services locally not under an employment relationship with the Brazilian resident ► Each RAS may comprise more than one reporting way, transaction code (NBS) and jurisdiction ► Each RAS cannot comprise more than one agreement or more than one provider ► Transactions not yet started cannot be included, but the RAS may be further amended ► RP (Registro de Pagamento) — registration of payment of an existing RAS

11 Page 11 SISCOSERV | New York | 20 September 2012 SISCOSERV Sales module — exports ► RVS (Registro de Venda de Servicos) ► Possible reporting ways: 1. Cross-border trade — sales made by Brazilian residents to foreign residents 2. Consumption in Brazil — travel of foreign residents to Brazil to take the service locally 3. Temporary expatriation of individuals — travel of Brazilian residents abroad for a limited period of time to render the services abroad ► Each RVS may comprise more than one reporting way, transaction code (NBS) and jurisdiction ► Each RVS cannot comprise more than one foreign party nor more than one currency ► RF (Registro de Faturamento) — registration of invoicing of an existing RVS ► RPC (Registro de Presenca Comercial no Exterior) ► Single reporting way: 1. Commercial presence abroad — sales made by subsidiaries, branches and controlled entities of a Brazilian legal entity to other foreign residents

12 Page 12 SISCOSERV | New York | 20 September 2012 SISCOSERV RAS and RVS — information to be provided ► Foreign party’s data ► Name ► Address ► Jurisdiction ► Tax identification number at home jurisdiction allowing classification of party as either individual or legal entity ► Transaction details ► NBS code ► Jurisdiction of destination (may differ from the location of foreign party) ► Currency (should be uniform for all transactions informed in each RAS/RVS) ► Transaction and service reporting ways ► Beginning date — transactions not yet started cannot be included, but the RAS/RVS may be further amended ► Conclusion date ► Transaction amount (must be higher than zero) ► Related benefit if applicable (e.g., BNDES-EXIM, PROEX) ► Related imports/exports if applicable, including number of registration with SISCOMEX

13 Page 13 SISCOSERV | New York | 20 September 2012 Up to 31 Dec days from the date in which the transaction begins or occurs RVS/RAS 1 Jan 2014 onward 30 days from the date in which the transaction begins or occurs Invoice/payment after the transaction begins/occurs Up to 31 Dec days from filing of RAS/RVS RF RP 1 Jan 2014 onward 30 days from payment/invoicing Invoice/payment before the transaction begins/occurs 30 days from filing of RAS/RVS RPC* Last business day of June of following year in which the transaction occurred * Implementation expected to begin in 2014 SISCOSERV Filing deadlines

14 Page 14 SISCOSERV | New York | 20 September 2012 SISCOSERV Other relevant aspects and open issues ► Relevant aspects ► Registration of transactions does not imply governmental acknowledgment of the transaction ► Open issues ► How to classify the transactions under the NBS list ► Reporting of transactions free of charge (implied exclusion vs symbolic amount) ► How to report under the RPC reporting way

15 Thank you!

16 Contacts ► Gerrit Groen Ernst & Young LLP Foreign Desks Leader ► Gilda Daumichen Ernst & Young LLP ► Mariano Manente Ernst & Young LLP Brazilian Desk


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