The Brazilian Federal Revenue Agency on 4 November 2016, published a proposed Normative Instruction to establish country-by-country reporting (CbCR) rules in Brazil for Multinational groups where the ultimate parent company is a resident in Brazil would be required to submit country-by country reports if the consolidated turnover exceeds €750 million. Instead of using the definition of OECD, the proposed Normative Instruction would refer to entities that are related to one another through direct or indirect “control.” The proposed Normative Instruction would then define the concept of control along the lines of Brazilian corporate law.
As per the proposed Normative Instruction, the CbC report will be embedded in the Brazilian electronic corporate tax return, which uses the calendar year. The relevant period for CbCR would not, however, necessarily be the calendar year as the reporting period used by the group may be a different 12-month period.
Under the proposed NI, transactions and financial operations that are not fully reported in the CbC report would give rise to a penalty of up to 3% of the primary value of the transactions.
