Is a Territorial-based Taxation Possible in Brazilian Legal Order

Offense to the Principle of Universality?

Abstract

In recent years, the international taxation testified many reforms, among which the most important are the BEPS project fostered by The Organization for Economic Co-operation and Development and the recent Tax Jobs and Cuts Act enacted by President Trump in the United States of America. Despite adopting some proposal of the BEPS project, it could be said that Brazil has not been seriously affected by such reforms for now, but eventually Brazil is going to study a comprehensive reform due to international pressure. In this context, the present paper aims to examine whether a migration towards a territorial-based taxation would comply with the Brazilian Constitution. In order to do so, we present the key characteristics of a worldwide-based and of a territorial-based tax system, such as economic links normally associated with which one, and the main critics made over them. Finally, we analyze the key features of the Brazilian tax system to identify reasons for or against the adoption of a territorial-based taxation.