Brazil Ministry of Finance reduces threshold rate for tax haven classification

The Ministry of Finance this week published Ordinance MF 488/14 in the Official Gazette, which reduces from 20% to 17% the threshold income tax rate for defining the concepts of low-tax jurisdictions and privileged tax regimes.

The qualifications of low-tax jurisdictions and privileged tax regimes are relevant because they may impact the application of Brazilian rules regarding thin capitalisation, transfer pricing, deductibility of payments for beneficiaries located in such jurisdictions or regimes, as well as the definition of income tax rates levied on cross-border remittances. In addition, such qualifications may also affect the application…