Taxpayers should ensure that they are in compliance with the new requirements for applying to the CNPL registry. Failure to report a final beneficiary or to provide other documentation could prevent a taxpayer from participating in certain transactions.

Brazilian Tax Authorities published Normative Instruction (NI) No. 1,634/2016, which modifies the procedures for applying to the Brazilian corporate taxpayer identification registry (CNPJ).

Modifications

The NI requires companies to indicate the "final beneficiary" on each CNPJ application. A "final beneficiary" is defined as the natural person who ultimately — directly or indirectly — owns, controls or significantly influences a particular entity or on whose behalf a transaction is conducted.

The "final beneficiary" also may be the natural person who either: (i) has, directly or indirectly, more than 25% of the company's capital; or (ii) holds or exercises, directly or indirectly, the power to elect the majority of the company's directors, even without controlling it.

Additionally, the NI requires companies to report the "legal entity identifier" when applicable. The "legal entity identifier" is part of an International Register used by several countries and is intended to increase security for international financial transactions.

Effective date

The NI is effective June 1, 2016, but the obligation to report the final beneficiary applies as follows:

a) Beginning January 1, 2017, for Brazilian or foreign companies that make their registration on or after this date

b) From January 1, 2017 to December 31, 2018, for Brazilian or foreign companies registered in the CNPJ before January 1, 2017

Companies that fail to (1) comply with the "final beneficiary" requirement or (2) submit the required documents specified in the NI will have their CNPJ enrollment suspended and, consequently, may be prevented from conducting transactions with banks, performing financial transactions and participating in public bids.

EY Brazil remains available for any clarifications related to this matter and can assist with applying to the CNPJ registry.

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