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A Bitesize Guide to Corporate Tax in Brazil

A Bitesize Guide to Corporate Tax in Brazil

Understanding corporate tax in Brazil is essential to the success and good health of your company while entering the Brazilian market. Brazil, the largest economy in Latin America, has a complex tax system whose rules are defined in the Federal Constitution and based on the various regulations issued by tax authorities. All companies operating in Brazil are subject to the payment of taxes. However, taxes vary according to the business activity that is developed. Learn everything you need to know about corporate tax in Brazil before taking advantage of business opportunities in 'the giant of South America'. Corporate tax in Brazil The Brazilian tax system is regulated by the Federal Constitution, and other state and municipal laws. In addition, there are some specific tax regulations that apply to companies operating in the country, depending on their business activity. In accordance with corporate tax compliance in Brazil, each company must pay taxes to the federal, state and municipal tax authorities. Federal taxes The tax on the importation of foreign products is applied from the entry of said products into Brazilian territory. Import tax (Imposto de Importação): The tax on the importation of foreign products is applied from the entry of said products into Brazilian territory. Its calculation is based on a specific rate defined by law or it can be based on the price that the product would reach once it is established in the Brazilian market. Export tax (Imposto de Exportação): The tax on the export of national products is charged when these goods are taken outside the...

Explaining Corporate Dividend Tax in Colombia For Businesses

Explaining Corporate Dividend Tax in Colombia For Businesses

Find out everything you need to know about corporate dividend tax for businesses in Colombia. Understanding corporate dividend tax might be a challenging experience for companies recently operating or looking to operate in Colombia. We outline the key concepts every foreign executive should consider when complying with local regulations and interacting with Colombian tax authorities. What are dividends for tax purposes in Colombia? In Colombia, dividends can be taxed by the company who distributes them. As we explored in our article 'Understanding dividend withholding tax in Colombia for US residents in 2020', the definition of dividends for tax purposes can be found in section 30 of the Colombian Tax Code, which states the following: “Any distribution of benefits, in money or kind, charged to the equity that is made to partners, shareholders, community members, associates, subscribers or similar. The transfer of profits that correspond to income and occasional gains of national source obtained through permanent establishments or branches in Colombia, by non-resident natural persons or foreign companies and entities, in favour of related companies abroad.” Furthermore, according to the 48 and 49 section of the National Tax Code, dividends are taxed considering income tax. Likewise, dividends can be received by a third party without being taxed. Understand the difference between taxed and non-taxed dividends As previously explained, dividends in Colombia may be taxed by the company in charge of distributing them or by the individual or entity receiving said dividends. This...

International Tax Minimization and Optimal Corporate Structuring

International Tax Minimization and Optimal Corporate Structuring

Learn why international tax minimization and optimal corporate structuring can help businesses to avoid increased costs and additional risks. With the rapid pace of globalization, there’s an increased need for companies to reduce the impact of international taxation over their operations. Bussines owners are increasingly seeking to reduce their costs associated with generating income and optimize the provision of profits for their shareholders. What’s international taxation? International taxation refers both to the implications of local tax dispositions in the global context, as to the international agreements and conventions that regulate international matters for tax purposes. International taxation refers to treaty provisions relieving international double taxation. As defined by OECD, 'International taxation refers to treaty provisions relieving international double taxation. In broader terms, it includes domestic legislation covering foreign income of residents (worldwide income) and domestic income of non-residents.' International taxation must not be confused with global taxation. The latter involves taxes that people are required to pay for receiving an income, regardless of the source. Multinational Enterprises (MNE's) and international conglomerates are some examples of entities with international tax duties and implications. However, even smaller or single jurisdiction companies must deal with international taxation when interacting with foreign clients or providing services abroad. It is important to note that every activity developed towards international...

How Corporate Tax Planning Strategies Reduce Liability and Improve Profitability

How Corporate Tax Planning Strategies Reduce Liability and Improve Profitability

Find out the essential elements for corporate tax planning strategies and how your company can make the most of them to reduce liabilities and improve profitability. Businesses and multinational entities must remain compliant with the law administered across all countries they operate within. Depending on tax agreements and arrangements between jurisdictions, this can make for a complex tax compliance burden to bear, especially for foreign companies unfamiliar with these markets. What is tax planning? Tax planning refers to the “arrangement of a person’s business or private affairs in order to minimize tax liability.” In its most basic definition by the Organization for Economic Co-operation and Development - OECD, tax planning refers to the “arrangement of a person’s business or private affairs in order to minimize tax liability.” Corporate tax planning focuses solely on the business element of this definition. For a more detailed definition, tax planning is understood as “the activity undertaken by a company or individual to reduce the tax liability by making optimum use of all permissible allowances, deductions, concessions, exemptions, rebates, exclusions and so forth, available under the law.” From these definitions, we can extract that tax planning has 2 fundamental premises. The first is that entities and individuals can develop activities aiming to reduce their tax burdens and optimize their profits. And the second, that said activities must always respect the appliable law. It is important to note that every activity aiming to optimize the tax burdens of an...

Explaining Developments in Digital Tax in Latin America

Explaining Developments in Digital Tax in Latin America

Economies in Latin America are changing rapidly. One important regulatory development for many countries in the region is digital tax, because it captures services delivered online or electronically. The OECD claims that Latin American economies are making real progress to address the tax challenges arising from the digitization of the economy. This international entity also expects that further digital tax developments in Latin America provides stability and certainty in the international tax system.  Managing your company while keeping a careful watch over new regulations is one of the challenges to overcome while doing business in Latin America.  We provide an explanation of digital tax developments in several emerging and developing economies in Latin America, so your business understands its obligations when offering digital services in these markets. Digital tax developments in Argentina  Latin American countries are adapting to a new digital age with the establishment of digital services taxes across the region. The Argentine government levied taxes for digital services under law 27,430 and on a general basis. This regulation includes services carried out through the Internet network or any adaptation or applications, platforms or technology used by the Internet or other networks through which equivalent services are provided. By their nature, these services are basically automated and require minimal human intervention, regardless of the device used for its download, display or use. The regulation of digital services in Argentina has been in place since 27...

New Law Improves Access to Tax Residency in Uruguay

New Law Improves Access to Tax Residency in Uruguay

In June 2020, a new decree was introduced to improve access to tax residency in Uruguay. According to Forbes, the country is considered one of the most favorable places to obtain residency and a second passport. Uruguay is characterized by being a country open to investment with a migration policy that provides a framework of public, legal and economic security for foreign nationals who decides to settle in Uruguay. On 11 June, President Luis Lacalle Pou announced Decree 163/20 in order to make the requirements for obtaining tax residency in Uruguay more flexible. A natural person who meets new eligibility requirements based on economic interest can obtain tax residency in the country. The Decree aims to stimulate investment on the premise of generating employment and improving social welfare for residents of Uruguay. Key points from Decree 163/20 to obtain tax residency in Uruguay According to Forbes, Uruguay is considered one of the most favorable places to obtain residency and a second passport. The new Decree outlines 2 key conditions to obtain tax residency in Uruguay: Investment in properties for a value greater than UI 3,500,000 (approximately US$370,000) made as of 1 July 2020, and an effective presence in Uruguayan territory for 60 days in the calendar year.Direct or indirect participation in a company with a value greater than UI 15,000,000 (approximately US$1,585,000) made as of 1 July 2020 and that generates at least 15 new direct jobs in a dependent employment relationship, hired from from 1 July 2020. Previous regulations for tax residency Previously,...

What are the Company Accounting and Tax Requirements in Guatemala?

What are the Company Accounting and Tax Requirements in Guatemala?

Whether looking for new investment opportunities in a country different from your own or planning to move your business to a new market, one of the first factors to consider is the foreign accounting and tax system. For those interested in expanding their business to Guatemala, companies or interested parties must understand all the accounting and tax requirements needed to operate.   To support your company incorporation and ongoing operations in Guatemala, be aware of and comply with the following accounting and tax requirements. Accounting regulations in Guatemala Be sure to have a full understanding of accounting and tax requirements in Guatemala. You may consider outsourcing this responsibility to ensure compliance. In January 2009, Guatemala adopted the International Financial Reporting Standards (IFRS) accounting regulations. However, it took the country a few years for its local professionals to receive the necessary training to apply them. Currently, the use of these standards is mandatory and generally known. International Financial Reporting Standards have a wide range of general and specific regulations for the labor industry, different lines of business, and possible operating risks, among other aspects. It is important to promptly identify the rules applicable to the business in which you want to invest, so they may be taken into account at the moment you must present your financial statements. This review must be carried out directly by the accounting/financial team in charge, together with the investor or, in the case of companies that are expanding,...

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