Brazilian Superior Court of Appeals and the Single Tax Principle

Abstract

The aim to pursue the single tax principle has dominated the agenda of the international community since the release of the reports addressing the action plans to target base erosion and profit shifting (the “BEPS Project”). The single tax principle is not a new issue in the international tax debate. Since the debates prior to the release of the first model tax conventions on income and capital, the aim to tax the income neither more nor less than once has been advocated as an ideal state of affairs. Recently, the Brazilian Judicial Courts issued a precedent providing that the application of double taxation conventions was conditioned upon the demonstration by taxpayers of the absence of hybrid mismatches leading to double non taxation. This article argues that such precedent is to be criticized firstly because it ignores the rules of Public International Law governing both the creation of rights and obligations among States and the interpretation of international conventions. Moreover, the precedent must also be criticized from the perspective of the legal uncertainty raised. Furthermore, this article argues that in case there is an international convention providing for the exchange of information for tax purposes on request and mutual agreement procedure, it is the Tax Administration that shall be in charged of requesting the information necessary to certify that there is no double non taxation outcome.