9/02/2011 em Imprensa

Fonte: TP-Week

The Brazilian Ministry of Revenue (BMR) is making efforts to preserve its tax base in what has been dubbed a currency war against the Brazilian real.

Normative Instruction No 4 (NI 4) has been published in Brazil’s Official Gazette, and is now law.

First proposed by BMR and published on January 17, the new law will be used to calculate transfer prices on controlled export transactions carried out in 2010.

The calculation intends to make adjustments in accordance with the gaping real to dollar exchange rate, which stands at 1real to $0.60, respectively. NI 4 provides relief to exporters who are subject to extra transfer pricing adjustment because they received less real in export revenues.

NI 4 states that proceeds of export sales to subsidiaries are subject to transfer pricing rules in Brazil when the average selling price of goods, services or rights in the export amounts to less than 90% (the limit) of the average price of the sale of those goods, services or rights.

“By adopting the factor stipulated in NI 4, the corporate taxpayers (exporters) would increase the value of the proceeds of export sales and the price charged within exports to related entities,” Leandro Cabral e Silva, tax partner at Velloza, Girotto e Lindenbojm Advogados Associados, said.

The likelihood of increased proceeds, over the limit, is raised as a result. If the proceeds are in fact higher, transfer pricing rules for tax purposes do not apply to domestic exporters.

“These [provisions] are of course welcome but the feeling in the business community is that they far from ideal, with the uncompetitive situation facing Brazilian exporters as a result of the strength of the Brazilian currency,” Haddad commented.

Anticipation of the currency in Brazil began in 2005, if not earlier, Cabral e Silva explained.

The Brazilian government is preparing to face the possibility that there is a gap, as big as the real to dollar exchange rate, in its domestic exporting industry.

The 1.09 factor means export revenues will be increased by 9%, for transfer pricing purposes, making it less likely that an adjustment will apply.

Adjustments are a direct result of the considerable appreciation of the Brazilian real in recent years.

“According to the tax authorities, the appreciation of the real is the only reason for the stipulation of such factors [NI 4],” said Cabral e Silva.

Brazilian exporters have experienced the brunt of this and the government wants to alleviate the burden for the biggest onshore industries like exporting and infrastructure.

The appreciation has occurred because of an inflow of funds into Brazil from non-resident investors, Gustavo Lian Haddad, tax partner at Lefosse Advogados in cooperation with Linklaters in São Paulo said.

“Part of this increase relates to permanent investment into the country by non-residents, for example the acquisition of businesses, investment in infrastructure and financing of listed corporates,” said Haddad.

The other part of Brazil’s inflation problem is not as simple.

“Part of it, however, results from speculative investments in the financial markets, to take advantage of the high interest rates still in force in Brazil, as a measure taken by the central bank to keep inflation under control,” said Haddad.

Brazilian companies based in Brazil are finding it more difficult to compete with other exporting countries. As the US dollar gets stronger and the real gets weaker, Brazilian exporters are getting less for their money.

“Their costs on the other hand remain the same and as a consequence they become less profitable,” said Haddad.

The ever-evolving Financial Operations Tax (IOF) tax hike which has peaked at 6%, for now, was also implemented to combat the inflow of short term funds and ultimately prevent depreciation of the currency.

The IOF tax applies to investments in the Brazilian financial market by non-residents only.

By increasing the IOF levied on the same kinds of foreign investments, subject to NI 4, the government aims to reduce the volume of US dollars in Brazil from a variety of outlets.

Even with the IOF tax, the revenue service has used similar tactics in the past. It expedited the process of receiving federal tax credits for exporters in the last year.