The Brazilian Voluntary Disclosure Program (RERCT), created by Law No. 13,254/16, has generated many questions and consequently, a great amount of consultation in my office. Brazilians or foreigners living in Brazil keeps assets abroad for many reasons. Some acquired by inheritance, others for fear of the Brazilian economy and some by ignoring the obligation to report to the Internal Revenue Service of Brazil the income earned in another jurisdiction.
The Brazilian Program is not clear and lots of questions emerge. The RERCT is a Program that allows residents in Brazil on 12.31.14, Brazilian or not, declare existing assets abroad with the extinction of criminal liability of various tax crimes, including tax evasion. In addition, the taxpayer will pay only 15% of assets and 100% fine.
There is another good point in the Program: the exchange to be applied is R$ 2.66, which creates a real benefit to the individual to join the RERCT.
It is important to say that those who have been convicted of some crimes described by the law, politicians or those who were not residents in Brazil in 31/12/2014, cannot apply for the Voluntary Disclosure Program.
Under the taxation perspective, the application the RERCT does not seem a good idea or advantage, once the tax is quite high and, in addition, there are doubts about the tax calculation base, if it is the balance at 31/12/2014 or the original values of the assets.
However, the Brazilian Voluntary Disclosure Program must be seen as an opportunity to legalize assets abroad, while its maintenance is practically impossible in the future, after the FATCA and the actions taken by the OECD in order to avoid competition between nations and tax base erosion. Thus, the global trend is the blocking of assets not regularized, as already signaled by Switzerland.
Finally, there is no doubt that the adoption of strategies and financial engineering for maintaining assets abroad, instead of joining the RERCT is like buying a lottery ticket that if you loose, you can be arrested and pay a great amount of money to brazilian government.Back to Articles Back to Gabriel Quintanilha
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.
Gabriel Quintanilha is based in Rio de Janeiro. Gabriel has been an attorney at law since 2006. He is also Professor of Tax Law at Fundação Getulio Vargas – FGV and IBMEC. Author of books and articles published in Brazil.
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