On September 21, 2017, the Federal Revenue of Brazil (RFB)
published Consultation Ruling COSIT RFB 443/2017, which denies an
exemption of the Withholding Income Tax (IRRF) for earnings of
Certificates of Real Estate Receivables (CRI). The petitioner, a
Brazilian subsidiary of a Canadian Government Agency, argued that
CRI earnings should be exempt from IRRF because:
(1) CRI earnings, when paid to Agencies exclusively owned by the
Canadian Government, are exempt from IRRF pursuant to Article 11(3)
of the Brazil-Canada Tax Treaty; or
(2) Earnings paid to a foreign Government from a Brazilian
source are exempt from IRRF pursuant to Article 688 of the Income
Tax Regulations, and considering that the relevant Agency is
exclusively owned by the Canadian Government, it is in essence a
part of the Canadian Government.
