The New Brazilian CFC Rules

were the Old Issues Overcome?

Abstract

This article divides the Brazilian corporate income worldwide taxation regime in two milestones: before and after the Federal Law nº 12.973/2014.In this sense, this article aims to identify if the main legal concerns that were present in the first moment will remain present in the second.
The ancient tax regime had many legal concerns related both to internal and international law. In this sense, this article highlighted to the judgment by Brazilian Federal Supreme Court (STF) of the constitutionality of article 74 of the Provisional Measure n. 2.158-35/2001 and also to Brazilian Federal Revenue Office Internal Legal Opinion n. 18/2013.
Regarding to the new tax regime, its analysis began by the regime applicable to corporate shareholding control and then the other corporate shareholding situations were analyzed. The regime applicable to the first situation (corporate shareholding control) suggests, in a first approach, that the object of taxation is the equity increase of the shareholder and not the profits earned abroad. This interpretation is however fragile since it reflects the isolated reading of article 77, caput of Federal Law n. 12.973/2014. On the other hand, the regime applicable to non shareholding situations in Federal Law n. 12.973/2014 has clearly the profits as the object of taxation and also allows deferral but only because it is the reflect of STF’s decision.