Taxation
The agreement aims to encourage mutual productive investment flows, strengthen bilateral commercial relations and contend tax planning
This Thursday (3), the Brazilian Federal Revenue Service secretary, tax auditor Jorge Rachid, and the Switzerland ambassador in Brazil, Andrea Semadeni, signed a Pact to Elimitate Double Taxation Related to Levies on Income and Prevent Tax Evasion and Avoidance between the Federative Republic of Brazil and the Swiss Confederation.
The Pact sets limits to the tax boundaries of the signee countries, eliminating or minimizing the possibilities of double income taxation and bringing more safety to business in general. The new agreement aligns the commitments made by the Country on the G20 summit with the minimum standards of the Project on Tax Base Erosion and Profit Shifting (BEPS Project) of the Organization for Economic Co-operation and Development (OECD), as well as other relevant recommendations from this Project. An article was also included, which is specific to contend tax avoidance and abusive use of this agreement.
The signature reflects Brazil’s efforts towards widening and modernizing its network of tax agreements, face an increasing context of mobility on commercial activities and internationalization of companies. It also arises from a greater mutual understanding that resulted, on November 23, 2015, in the signing of an agreement for the exchange of information on tax matters. This process of progressive cooperation narrowing among countries in the tax sphere has also enabled the signing, on November 18, 2016, of a joint declaration for the automatic exchange of tax information.
The importance of the agreement for Brazil stems from the significant Swiss participation in international trade in goods and services, and in the investment scenario, with a solid presence of Switzerland in relevant sectors of the Brazilian economy. Switzerland occupies the sixth position among the countries that invest most in Brazil, with amounts of US$ 22 billion (data for 2016), and this kind of agreement with Switzerland is among the main demands of the Brazilian private sector. Once in force, it will be the 34th instrument of this nature to be part of the Brazilian scope of agreements.
This type of agreement aims to encourage mutual productive investment flows between countries and to strengthen bilateral trade relations, while contending tax planning and the possibilities of abusive use of the treaty.
The new agreement will thus contribute to the internationalization movement of Brazilian companies, which has been observed in recent years, in addition to further strengthening Swiss investments in Brazil.
Signature
After signing the document, Secretary Jorge Rachid stressed its importance both for Brazilian companies with business in Switzerland as to those of Switzerland operating in Brazil, “both to prevent tax avoidance and to its significance in terms of making the tax field safer”.
According to Rachid, the agreement signed today complements the one that has already been signed between the two countries in 2015, to prevent tax avoidance, and the later, signed in 2016, which allows the automatic exchange of tax information. “This is a very important moment for us, since Switzerland is one of Brazil’s biggest investors,” said the secretary.
Ambassador
Ambassador Andrea Semadeni stressed the importance of signing the agreement for Switzerland. “This is also an important moment for us, because the lack of a double taxation agreement between the two countries was one of the biggest complaints of Swiss companies.” According to him, the agreement will further strengthen the commercial relationship between the two countries, “with our Minister of Finance visit to Brazil in July.”