Tax News: FATCA Alert - Normative Instruction RFB 1,571/15

Tax News | FATCA Alert - Normative Instruction RF...

Brazil – FATCA reporting guidance

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Tax News: FATCA Alert - Normative Instruction RFB 1,571/15

On July 3rd, 2015, the Brazilian Revenue Service published Normative Instruction (IN) 1571/2015 regulating the Intergovernmental Agreement (IGA) for Implementation of the Foreign Account Tax Compliance Act (FATCA) between Brazil and the United States and establishing new tax reporting rules for financial transactions under a new regime named “e-Financeira.”.

 

According to article 4 of the IN, the following legal entities are required to file the e-Financeira report:

  • Entities authorized to structure and commercialize complementary pension plans;
  • Entities authorized to establish and manage Individual Retirement Funds (so-called FAPIs);
  • Entities whose main or accessory activity is the collection, intermediation, investment of own or third-parties financial resources, in national or foreign currency, and custody of third parties' securities, certain consortia; and
  • Insurance companies authorized to structure and commercialize individual insurance plans.

 

The obligation established under article 4 covers entities regulated by the Brazilian Central Bank, the Brazilian Securities Commission (CVM), Private Insurance Regulator (SUSEP) and the National Supplementary Pensions Department (PREVIC).

 

General rule, the e-Financeira shall be used to report the transactions as from January 1st, 2015 and it must be filled every six months. Specifically in relation to the year of 2015, e-Financeira must be filled until the last business day of May, 2016.

 

It must be noted that, in relation to the legal entities classified as financial institution under the Intergovernmental Agreement (IGA) signed between the Brazilian Government and the United States Government with respect to the US Foreign Account Tax Compliance Act (“FATCA”) must already report the transactions from July to December 2014. In this regard, a short version of e-Financeira containing only the information directly related to the aforementioned Agreement must be filled until August 15, 2015.

 

It shall be noticed that the information must be filled observing a specific layout to be defined by the Brazilian tax authorities. The mandatory layout shall be published within 15 days of the release of the IN and the respective instructions on how to prepare the files to be submitted shall be published within 30 days of such release.

 

As it already occurs with other tax filing obligations in Brazil, e-Financeira is part of the Sped Program and it is possible that, in order to attend the specific requirements, changes on the current process and systems utilized by the companies/institutions might need to be implemented.

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