Tax Treaty Case Law around the Globe 2017

1. S. 172Introduction

The Brazilian rules on the taxation of controlled foreign companies have been the most debated issue of international taxation in Brazil in recent decades. Besides significant academic debate on whether such regimes should be considered “CFC rules”, as is the case in other jurisdictions, or on whether they can be considered anti-abuse provisions, the interpretation and application of such rules has also been afforded significant attention from Brazilian Courts.

The main object of debate is still the revoked Provisional Measure nº 2158-35/2001 (hereinafter, the MP). The MP was subject to a constitutional decision which took more than a decade to be handed down, leading to longstanding uncertainty regarding the applicable regime. Despite the revocation of the MP in 2014, Brazilian administrative and judicial courts are currently still deciding cases to which these rules were applicable.

In the last edition of Tax Treaty Case Law Around the Globe, the Brazilian Report described the Brazilian legislation on the taxation of controlled foreign companies as “a case for Article 7”, applauding a decision of the Brazilian Superior Court of Justice (Superior Tribunal de Justiça, ...