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Legal Update

Brazil: PM No. 694/2015: Change in the Rules Applicable to Interest on Equity; Suspension of Tax Benefits Provided Under Law 11,196/2005 (the So-Called “Lei do Bem” in Portuguese); and Increase of the Rates Relating to PIS-Importation and COFINS-Importation Levied on Imports of Chemical Compounds

7 October 2015
Tauil & Chequer Legal Update

Provisional Measure No. 694/2015 was published on September 30th, 2015, with the purpose of changing the following tax rules:

  1. Increasing the withholding tax rate levied on the payment or credit of interest on equity from 15% (fifteen percent) to 18% (eighteen percent), as well as limiting the interest deducted to the lowest of 5% (five percent) or the Long-Term Interest Rate – TJLP;
  2. Suspending, during the calendar year of 2016, the following benefits under Law 11,196/2005 (the so-called “Lei do Bem” in Portuguese) relating to the exclusion of IRPJ and CSLL from amounts exceeding the expenses actually incurred with research and development:
    • Directly by a retained Scientific and Technological Institution  or by private scientific and technological nonprofit organizations; and
    • By entities from the computing, automation and information technology industries.
  3. Raising the PIS-Import and COFINS-Import tax rates from, respectively, 0,54% (zero point fifty four percent) and 2,46% (two point forty six percent) to 1,11% (one point eleven   percent) and 5,02% (five point zero two percent), from January 1st, 2016, onwards, applicable to imports of the following products:
    • Ethane, propane and butane to be used for to ethylene and propane production;
    • Petrochemical naphtha and condensed naphta  for petrochemical centrals; and
    • Ethane, propane, butane, butadiene, ortho-xylene, benzene, toluene, isoprene and paraxylene, where the import is made by chemical industries.

The above mentioned rules come into force on 1st January, 2016.


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