Brazil, U.S. sign tax pact frozen by spy scandal

Brazil signed a tax information exchange agreement with the United States to prevent tax evasion, the South American country’s finance ministry said on Tuesday, a step long sought by businesses that was held up by a spy scandal last year.

The pact opens the door to a tax treaty to avoid the double taxation of U.S. companies operating in Brazil and Brazilian businesses in the United States.

The accord was put on ice last year after revelations that the United States had spied on Brazilian President Dilma Rousseff strained relations between the continent’s two largest economies. Rousseff canceled a state visit to Washington in October and demanded an apology from President Barack Obama.

The United States has said publicly it regretted the incident, but has so far stopped short of issuing a formal apology.

Under the tax agreement the Brazilian tax agency will provide the U.S. Internal Revenue Service with the financial information of U.S. taxpayers in Brazil and vice-versa, the finance ministry said in a statement.

The agreement is part of a effort by the Group of 20 to prevent global tax evasion, the ministry added.