Brazil signs agreement for information on assets in tax havens

Presidency sent to Congress ratification of treaties with Jersey, Guernsey, the Cayman Islands and Uruguay; text follows the G20 guidelines

The Presidency referred for evaluation of Congress four agreements for the exchange of tax information (TIEA, which stands for the English term “Tax Information Exchange Agreement”) entered into with Uruguay, Jersey, Guernsey and the Cayman Islands, and a protocol for expand and update the data exchange pursuant to the agreement to avoid double taxation with India. This will help Brazil to avoid tax evasion, ie, how to evade payment of taxes or fees.

Once ratified, these agreements, as published in the Official Gazette of the Union, allow Brazil to obtain information on financial assets held and income earned in those countries, to ascertain compliance with tax obligations by Brazilian taxpayers. The conclusion of such agreements is in line with the G20 guidelines to increase transparency in tax matters and combat evasion through concealment of assets and outside income.

In this effort, there is the development of a global standard for the automatic exchange of financial information for tax purposes – “Standard for Automatic Exchange of Information in Financial Account Tax Matters”. Once implemented, this model will increase the international transparency by broadening the tax authorities access to financial transactions and to multiply the network of tax administrations involved in the process of exchange of information.

Brazil assumed commitments to the G20 and the Global Forum on Transparency and Tax Purposes for Information Exchange that will adopt this standard as of 2018. In addition to the referred agreements and conventions to avoid double taxation in place, the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which is under consideration by Congress, conforms the legal framework that will enable the implementation of the global standard for the automatic exchange of financial information.

In order to get an idea of the impact of this project, from 2018, the IRS will have access to any kind of financial transactions carried out by Brazilian citizens in any of the seventy-seven signatory jurisdictions of the Multilateral Convention, including those regarded as financial institutions and jurisdictions with favorable tax treatment. Information obtained automatically and periodically ensure the identification of tax evasion evidence within a risk assessment strategy.

These initiatives, taken in a coordinated manner among the 129 member countries of the Global Forum, allow us to glimpse the end of the era of banking secrecy as a means of avoiding the payment of taxes due, especially in relation to assets held abroad.