On May 29, 2017, Brazil has submitted to the OECD a formal request to become a member of the organization.
Today, the Organization for Economic Co-operation and Development
(“OECD”) gathers 35 member states, which include many of the most developed economies in the world, such as the United States, United Kingdom, Germany, Japan, but also emerging countries, such as Mexico, Chile and Turkey.
The letter, signed by the Brazilian Ministers Aloysio Nunes (Foreign Relations) and Henrique Meirelles (Economy), and addressed to Secretary-General of the organization, Angel Gurría, makes reference to the recent collaborations between Brazil and OECD, as the Global Forum on Exchange of Information and Transparency for Tax Purposes and the Convention on Mutual Administrative Assistance in Tax Matters, being the last one of the 31 OECD legal instruments that Brazil is currently part of. The Ministers also emphasize on the letter that Brazil is one of the five key partners of the organization, with a relationship dating back to 1994.
Brazil has a long history of going its own way where international tax standards are concerned. However, more recently there has been a series of initiatives from the Brazilian government to comply with certain OECD’s standards procedures. Among them, the standardization of Double Taxation Treaties (“DTT”) following OECD guidelines, as well as the efforts to implement a local legislation on transfer pricing documentation, as per the recently enacted Normative Instruction #1,681/2016 on BEPS’ Action 13 (i.e., Country-by-Country reporting).
The request to join the organization is part of the government’s strategy to regain the confidence of foreign investors into the Brazilian economy. As per the letter itself, “the approach to OECD is part of a wider strategy of the Brazilian government to consolidate a path for sustainable and inclusive development”. The country has been seeking to join OECD for years but now the initiative is seen as a priority to Michel Temer’s government.
The next steps would be the appreciation of the organization to the Brazilian request and the direct negotiations between Brazil and OECD in order to match the expectations and define the upcoming procedures.
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