November 30, 2018 Brazil's Revenue Authority gives more taxpayers access to Mutual Agreement Procedure in Brazil The new Normative Instruction (NI) allows more taxpayers to access the Mutual Agreement Procedure (MAP). Taxpayers that have previously not been able to use the MAP should review the new NI to determine if they qualify for the MAP. Brazil's Revenue Authority (RFB) published, on November 29, 2018, new MAP NI 1,846/18, which replaces NI 1,669/16, and makes a number of amendments that allow more taxpayers to access the MAP. Background MAP is a bilateral tax dispute resolution tool aimed at avoiding double taxation that may be generated, even though Brazil has a Double Tax Treaty in effect. To demonstrate Brazil's commitment to the Base Erosion and Profit Shifting (BEPS) project of the Organisation for Economic Co-operation and Development (OECD) and its intention to join the OECD, the RFB published NI 1,669/16 to implement the MAP in Brazil. NI 1,669/16 adopted the so-called minimum standard for the resolution of treaty-related disputes, in accordance with Action 14 of BEPS. NI 1,669, however, caused some controversy because it contained a rule that denied Brazilian taxpayers access to MAP when an administrative or judicial court in Brazil had already issued a decision on the issue at hand. As a result of some of these controversies, some Brazilian taxpayers may not have applied for the MAP. NI 1,846/18 Possibly due to the weak results Brazil received in the recent peer-review of its Action 14 application, which was conducted by OECD BEPS members, the RFB published NI 1,846/18. NI 1,846/18 replaces NI 1,669/16 and makes some amendments to give more taxpayers access to the MAP. Specifically, NI 1,846/18 amends the MAP to allow taxpayers access to the MAP, even if they have already had an issue decided by an administrative or judicial court. In such circumstances, however, the MAP will be focused on trying to resolve the double taxation issue based on a bilateral solution, which will depend on the good will of the treaty partner, as the Brazilian tax authorities may be legally prevented from going against an existing decision. The new NI also clarifies the manner in which the Brazilian taxpayer will be notified by the RFB about the MAP conclusions. ———————————————
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