• The Brazilian voluntary disclosure program

    By Carlos Eduardo Navarro

    25-05-2016

    Over the last decades, many Brazilian individuals have kept or remitted abroad considerable amount of assets and income without the due disclosure. It is true that, as in many other countries, one of reasons to do so was the practice of tax evasion; but there were some other very particular reasons derived from the Brazilian economic and political context, such as the huge inflation rates (almost 1,700% average inflation in 19931) and the wages and prices freeze2.

    In the past few years, however, the global scenario has changed rapidly, and the maintenance of undeclared funds in foreign banks became a difficult task. In a very short time, the world has experienced considerable progress in the global transparency and fight against tax evasion, and some taxpayers were investigated and convicted of crimes in Brazil (tax crimes, funds evasion, and money laundering) in view of the exchange of tax information with other jurisdictions.

    In this scenario, the Brazilian government has decided to create a voluntary disclosure program, similar to the ones launched in several countries in the last years3. The Brazilian program (called RERCT - Regime Especial de Regularização Cambial e Tributário in Portuguese) is in force since last April, and allows the taxpayers (both individuals and corporations) to declare offshore tangible and intangible assets.

    The option to take part in the RERCT can be done up to October 31, 2016 if the taxpayer meets the following requirements/conditions:

    1. was tax resident in Brazil in December 31, 2014;
    2. was not convicted of some crimes; and
    3. was not a politician or did not hold a high-level job/function in the Brazilian government (including its relatives and spouse) in January 13, 2016.

    It is important to clarify that RERCT does not allow the repatriation of funds with a criminal origin (except tax crimes), such as corruption, smuggling, etc.

    If the taxpayer decides to apply for the program, it must pay an amount of 30% of the offshore assets declared, which corresponds to a 15%-income tax and a 15%-punitive fine.

    When the option is confirmed, the taxpayer will enjoy criminal amnesty for the crimes listed in the section 5 of the Law 13,254/2016.

    In my opinion, the Brazilian voluntary disclosure program is a very good opportunity for the Brazilian taxpayers to avoid criminal penalties by incurring in a tax burden that, in many cases, is lower than the one imposed by the Brazilian government to earnings received by individuals and companies.


    1. http://www.inflation.eu/inflation-rates/brazil/historic-inflation/cpi-inflation-brazil-1993.aspx.
    2. http://www.nytimes.com/1991/02/01/world/brazil-freezes-all-wages-and-prices.html.
    3. https://www.oecd.org/ctp/exchange-of-tax-information/Voluntary-Disclosure-Programmes-2015.pdf.
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  • The information provided in this article is for general information purposes only. The information is not intended to be comprehensive or to include advice on which you may rely. You should always consult a suitably qualified professional on any specific matter.

Carlos Eduardo Navarro

Carlos Eduardo Navarro is based in São Paulo, Brazil. Navarro has specialized in advising Brazilian and foreign companies and individuals on tax and customs laws for more than 10 years. Carlos Navarro is regularly interviewed by leading business editions and has authored and co-authored several articles in recognized Brazilian and international journals. Navarro is also lecturer at the Fundação Getulio Vargas business and law schools in São Paulo.

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