INTERNATIONAL CORPORATE TAX
International Tax Brazil
22
June, 2007
TA X
New decision issued by the Brazilian Supreme Court regarding
ICMS levied on importation of leased goods
A new ruling by the Brazilian Supreme Court stated that ICMS is not levied on
imported goods1 under cross-border leasing agreements. The Court decision was
based on the main fact that importation under leasing agreements does not
involve transfer of ownership (among other arguments).
The decision emanated from the Brazilian Supreme Court is related to the
importation of airplanes parts and was issued to one of the majors Brazilian
airline carriers. This decision represents a relevant tax relief, in view of the high
tax burden of ICMS on import transactions. In general, ICMS tax base on imports
is equal to the CIF value added by the applicable import tax, IPI, certain customs
expenses, the ICMS itself and PIS and COFINS due on the import. The applicable
rates may be 17%, 18% or 19%.
Nevertheless, it should be mentioned that in 2005 the Brazilian Supreme Court
issued a decision recognizing that customs clearance of the imported good is an
ICMS taxable event2, regardless of the underlying contractual arrangement.
It is important to stress that both decisions mentioned above are not generally
binding other than for the involved parties. Although the decisions related to
ICMS on leasing agreements are controversial, the recent decision by the
Brazilian Supreme Court represents a potential new trend in favor of taxpayers.
Interpretative Declaratory Act n° 07 from the Revenue Service
regarding the taxation on investment funds
Secretaria da Receita Federal (SRF) recently issued the controversial
Interpretative Declaratory Act (ADI) n° 07, of 24 May 24 2007, related to the
computation of capital gains in investment funds. According to this new
provision, the computation of capital gains derived from an “in-kind” capital
increase must be done at market value.
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1
2
STF, RE 461.968/SP, 30.5.07
STF, RE 206.069/SP, 01.09.05
kpmg.com.br
Contacts
Prior to ADI n° 07/07, taxpayers took
position that the computation of
capital gains in an “in-kind” capital
increase could be either at market or
book value. Accordingly, the
shareholder would usually contribute
its shares in an investment fund at
book value. Afterwards, the
investment fund would sell these
shares at market value. This practice
was very common due to the
postponement of the withholding tax
(WHT), which would only be paid in the
event of the redemption of the fund
shares by the investor.
ADI n° 07/07 indicates the tax
administration understanding that the
investor should paid the WHT at a 15%
rate at the moment of the in-kind share
capital increase.
For more information, contact an international corporate tax professional:
São Paulo
Rio de Janeiro
Marienne S. Munhoz, +55 11 2183-3182,
[email protected]
Roberto Haddad, +55 21 3515-9469,
[email protected]
Ericson Amaral, +55 11 2183-3375,
[email protected]
Mauro Ostwald, +55 21 3515-9417,
[email protected]
Luiz Dardes, +55 11 2183-3188,
[email protected]
Luis Trzcina, +55 21 3515-9462
[email protected]
Pedro Anders, +55 11 2183-3123,
[email protected]
If you have any questions or comments or
wish to update your data, include other
professionals or remove your name from
the distribution list, please send an e-mail
to [email protected]
Murilo Mello, +55 11 2183-3261,
[email protected]
Ruy Lopes, +55 11 2183-3269,
[email protected]
Fabiana Almeida, +55 11 2183-6571,
[email protected]
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