Income Tax of Controlled Companies Located in Countries with Regular Taxation

Abstract

The objective of this article is to analyze the compatibility of the law in the matter of tax on income, resulting from applications by Brazilian companies abroad, with the Federal Constitution, especially with respect to investments made in controlled companies in countries with regular taxation. We explain the constitutional concept of income and requirement of availability as criteria able for taxation. We treat the divergences concerning the taxation of profits earned by controlled companies, located outside countries that are consider tax heavens. Then, we reach the critical considerations, adopting the understanding that, from an eminently legal perspective, the current model adopted is not in line with the Brazilian legal system. And, in the end, we present the grounds that’s justify the affirmation that, also in an economic and development perspective, the tax model adopted by law is not compatible with the national demands.