December 7, 2018 Deadline to disclose 'final beneficiary' to Brazilian tax authorities is December 31, 2018 Companies should ensure that they comply with the "final beneficiary" requirement as failure to comply could lead to the suspension of their CNPJ enrollment and could affect their ability to conduct certain transactions. Brazilian and foreign companies registered with the CNPJ (Brazilian corporate taxpayer identification registry) must report the "final beneficiary" on or before December 31, 2018. In accordance with the Base Erosion and Profit Shifting (BEPS) initiative, the Brazilian Tax Authorities issued, in May 2016, regulations aimed at ensuring compliance with international transparency standards. Under the regulations (Normative Instruction No. 1,634), companies registered in the CNPJ must disclose the chain of companies or entities up to the "final beneficiary." 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" may also be the natural person who either (i) holds, 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. Subject to certain exemptions, Brazilian and foreign companies subject to this ancillary obligation must report the final beneficiary on or before December 31, 2018. To fulfill the obligation, certain documents must be submitted to the Brazilian Federal Revenue Service. Companies that fail to comply with this requirement will have their CNPJ enrollment suspended and, consequently, may be prevented from conducting transactions with banks, performing financial transactions and participating in public bids. ———————————————
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