The President of the Republic signed, last March 16th, Law 13.259/16, which transforms in Law the Provisional Measure 692/15.
The final text of Law 13.259 / 16 established progressive rates for the taxation of income tax on capital gains from the disposal of assets and rights of any kind. Progressive tax rates are:
• 15% on the portion of income not exceeding R $ 5,000,000.00
• 17.5% on the portion of income that exceeds R $ 5.000.000,00 and not exceed R $ 10,000,000.00
• 20% of the portion of the profit that exceeds R $ 10,000,000.00 and not exceed R $ 30,000,000.00
• 22.5% over the amount exceeding R $ 30,000,000.00
We clarify that the goods or rights located in Brazil sales by non-residents in the country natural or legal persons these rates also apply.
In the case of the sale of parts of the same asset or right, the second operation, if carried out until the end of following the first operation calendar year, the capital gain must be added to the achievements of the previous operations in order to calculate the income tax based on the above rates, deducting the amount of tax paid in previous operations.
For this purpose, the Law 13.259 / 16 makes it clear that the set of shares of the same legal entity are members of the same asset or right.
Law 13.259/16 also brought a change in the rule of taxation of profits obtained by subsidiaries of Brazilian companies abroad, originally established by Law 12.973/14.
In this sense, the new law introduced Article 82-A of Law 12.973/14, which states that the legal person involved in Brazil can optionally provide tax profits earned by foreign subsidiaries to the taxation regime “competition”, depending on the grade of rising of the benefits in the balance of the associate.
The general rule in Article 81 of Law 12.973/14, provides that the taxation of profits earned by the foreign subsidiary should not use the “cash” system, ie, just at the time that the benefits were actually available to the partner in Brazil.
Through the new rule introduced by Law 13.259/16, the subsidiary in Brazil can opt for the competition regime or cash and, in the case of the former, there are arguments to support that would be subject of the rules for calculating tax credit paid abroad, and it applies to subsidiaries. Thus, the subsidiary in Brazil could be recognized as a credit both the income tax paid by the subsidiary on its profits in their country of residence as well as any income tax at source on dividends distributed to that affiliate in Brazil.
It is important to emphasize that that option will still be regulated by the Federal Revenue.