Tax Planning Must Be Reported In Brazil

By means of Provisional Measure No. 685, dated July 21, 2015 (MP 685/2015), that creates the Tax Litigation Reduction Program (Programa de Redução de Litígios Tributários – PRORELIT), the Brazilian federal government imposed a new obligation to the taxpayers vis-à-vis the Brazilian Internal Revenue Service (IRS), which consists of filing by September 30 of each calendar year a return disclosing the set of operations involving acts or legal transactions that entail the abolition, reduction or deferral of taxes that occurred in the previous calendar year whenever any of the following events happens:

1. the performed operations do not have a relevant non-tax purpose;
2. the adopted form is unusual or uses an indirect legal transaction or contains a clause that changes the nature, in whole or in part, of the effects of a typical contract; or