{"id":5071,"date":"2022-04-11T11:25:22","date_gmt":"2022-04-11T11:25:22","guid":{"rendered":"https:\/\/lataxnet.net\/es\/?p=5071"},"modified":"2022-04-11T11:25:22","modified_gmt":"2022-04-11T11:25:22","slug":"brazil-effects-of-extinction-of-libor-rate-to-brazilian-tp-controls","status":"publish","type":"post","link":"https:\/\/lataxnet.net\/es\/brazil-effects-of-extinction-of-libor-rate-to-brazilian-tp-controls\/","title":{"rendered":"Brazil: Effects of extinction of LIBOR rate to Brazilian TP controls"},"content":{"rendered":"<p><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-1 nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"background-color: rgba(255,255,255,0);background-position: center center;background-repeat: no-repeat;padding-top:0px;padding-right:0px;padding-bottom:0px;padding-left:0px;margin-bottom: 0px;margin-top: 0px;border-width: 0px 0px 0px 0px;border-color:#e2e2e2;border-style:solid;\" ><div class=\"fusion-builder-row fusion-row\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-0 fusion_builder_column_1_1 1_1 fusion-one-full fusion-column-first fusion-column-last\" style=\"margin-top:0px;margin-bottom:20px;\"><div class=\"fusion-column-wrapper fusion-flex-column-wrapper-legacy\" style=\"background-position:left top;background-repeat:no-repeat;-webkit-background-size:cover;-moz-background-size:cover;-o-background-size:cover;background-size:cover;padding: 0px 0px 0px 0px;\"><style type=\"text\/css\"><\/style><div class=\"fusion-title title fusion-title-1 fusion-sep-none fusion-title-text fusion-title-size-three\" style=\"margin-top:10px;margin-bottom:15px;\"><h3 class=\"title-heading-left\" style=\"margin:0;\">Brazil: Effects of extinction of LIBOR rate to Brazilian TP controls<\/h3><\/div><div class=\"fusion-clearfix\"><\/div><\/div><\/div><\/div><\/div><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-2 hundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"background-color: rgba(255,255,255,0);background-position: center center;background-repeat: no-repeat;padding-top:0px;padding-right:0px;padding-bottom:0px;padding-left:0px;margin-bottom: 0px;margin-top: 0px;border-width: 0px 0px 0px 0px;border-color:#e2e2e2;border-style:solid;\" ><div class=\"fusion-builder-row fusion-row\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-1 fusion_builder_column_1_1 1_1 fusion-one-full fusion-column-first fusion-column-last\" style=\"margin-top:0px;margin-bottom:20px;\"><div class=\"fusion-column-wrapper fusion-flex-column-wrapper-legacy\" style=\"background-position:left top;background-repeat:no-repeat;-webkit-background-size:cover;-moz-background-size:cover;-o-background-size:cover;background-size:cover;padding: 0px 0px 0px 0px;\"><style type=\"text\/css\"><\/style><div class=\"fusion-title title fusion-title-2 fusion-sep-none fusion-title-text fusion-title-size-five\" style=\"margin-top:10px;margin-bottom:15px;\"><h5 class=\"title-heading-left\" style=\"margin:0;\">In 2021, the United Kingdom\u2019s Financial Conduct Authority announced several changes to the benchmark settings currently published by the ICE Benchmark Administration, including the cessation of the publication of EUR LIBOR settings, as well as the 1-week and 2-month USD LIBOR settings after 31 December 2021. The Financial Conduct Authority also decided to continue to determine and publish the 6-month USD LIBOR settings at least until the end of June 2023. These changes may have a direct impact on TP calculations performed for loans granted by and to Brazilian legal entities.<\/h5><\/div><div class=\"fusion-clearfix\"><\/div><\/div><\/div><\/div><style type=\"text\/css\">.fusion-fullwidth.fusion-builder-row-2 { overflow:visible; }<\/style><\/div><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-3 nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"background-color: rgba(255,255,255,0);background-position: center center;background-repeat: no-repeat;padding-top:0px;padding-right:0px;padding-bottom:0px;padding-left:0px;margin-bottom: 0px;margin-top: 0px;border-width: 0px 0px 0px 0px;border-color:#e2e2e2;border-style:solid;\" ><div class=\"fusion-builder-row fusion-row\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-2 fusion_builder_column_1_1 1_1 fusion-one-full fusion-column-first fusion-column-last\" style=\"margin-top:0px;margin-bottom:20px;\"><div class=\"fusion-column-wrapper fusion-flex-column-wrapper-legacy\" style=\"background-position:left top;background-repeat:no-repeat;-webkit-background-size:cover;-moz-background-size:cover;-o-background-size:cover;background-size:cover;padding: 0px 0px 0px 0px;\"><div class=\"fusion-text fusion-text-1\"><p>The transactions involving interest carried out by Brazilian legal entities with foreign related parties (as defined under Brazilian TP legislation), related or unrelated parties domiciled in tax havens or non-residents subject to privileged tax regimes must follow Brazilian TP rules and the thin capitalisation rules.<\/p>\n<p>In accordance with Brazilian TP rules, the interest expenses incurred by a Brazilian legal entity shall be considered deductible up to the amount that does not exceed the rates determined based on the following rules (the minimum interest revenues recorded by Brazilian companies shall be calculated based on the same rules):<\/p>\n<p><img loading=\"lazy\" class=\"alignnone wp-image-5072\" src=\"https:\/\/lataxnet.net\/es\/wp-content\/uploads\/2022\/04\/Loans.png\" alt=\"\" width=\"725\" height=\"207\" srcset=\"https:\/\/lataxnet.net\/es\/wp-content\/uploads\/2022\/04\/Loans-200x57.png 200w, https:\/\/lataxnet.net\/es\/wp-content\/uploads\/2022\/04\/Loans-300x86.png 300w, https:\/\/lataxnet.net\/es\/wp-content\/uploads\/2022\/04\/Loans-400x114.png 400w, https:\/\/lataxnet.net\/es\/wp-content\/uploads\/2022\/04\/Loans-600x171.png 600w, https:\/\/lataxnet.net\/es\/wp-content\/uploads\/2022\/04\/Loans-768x219.png 768w, https:\/\/lataxnet.net\/es\/wp-content\/uploads\/2022\/04\/Loans-800x229.png 800w, https:\/\/lataxnet.net\/es\/wp-content\/uploads\/2022\/04\/Loans.png 1022w\" sizes=\"(max-width: 725px) 100vw, 725px\" \/><\/p>\n<p>As a result, after the changes announced by the Financial Conduct Authority, the Brazilian companies that used to apply EUR LIBOR to comply with the TP rules to calculate the benchmark for interest expenses (or revenues) will be forced to use the 6-month USD LIBOR (\u201cUSD LIBOR 6M\u201d).<\/p>\n<p>The impact that could arise for Brazilian companies may be verified by the comparable analysis of the historical variation of EUR LIBOR 6M versus USD LIBOR 6M during 2021:<\/p>\n<p><img loading=\"lazy\" class=\"alignnone wp-image-5073\" src=\"https:\/\/lataxnet.net\/es\/wp-content\/uploads\/2022\/04\/January.png\" alt=\"\" width=\"483\" height=\"208\" srcset=\"https:\/\/lataxnet.net\/es\/wp-content\/uploads\/2022\/04\/January-200x86.png 200w, https:\/\/lataxnet.net\/es\/wp-content\/uploads\/2022\/04\/January-300x129.png 300w, https:\/\/lataxnet.net\/es\/wp-content\/uploads\/2022\/04\/January-400x172.png 400w, https:\/\/lataxnet.net\/es\/wp-content\/uploads\/2022\/04\/January-600x258.png 600w, https:\/\/lataxnet.net\/es\/wp-content\/uploads\/2022\/04\/January.png 736w\" sizes=\"(max-width: 483px) 100vw, 483px\" \/><\/p>\n<p>Whilst the EUR LIBOR 6M was negative and relatively constant for 2021, the USD LIBOR 6M was positive and had a slight fluctuation. In view of this situation, the replacement of the EUR LIBOR 6M rate for the USD LIBOR 6M rate could result in two different scenarios: (i) if the borrower is a Brazilian company, this change could, in principle, increase the maximum amount of interest to be deducted from the Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL) basis; and (ii) if the lender is a Brazilian company, this replacement could result in a corresponding increase of the minimum interest revenue to be considered by the Brazilian company for IRPJ and CSLL purposes.<\/p>\n<p>The Brazilian Federal Revenue Service has not announced any changes to the rules currently in place in view of these changes.<\/p>\n<p>As such, Brazilian companies should evaluate whether adjustments are necessary to loan agreements currently in place, if based on EUR LIBOR settings, and verify whether additional adjustments to the loans are advisable to use other methodologies provided by TP legislation.<\/p>\n<p>It is recommended that Brazilian legal entities and multinationals with loans with Brazilian companies keep these changes in mind for future transactions.<\/p>\n<p><em>Writers: Stephanie Makin and Gabriel Lacerda, Machado Associados<br \/>\n<\/em><em>Original: https:\/\/www.machadoassociados.com.br\/en\/publicacoes\/effects-of-extinction-of-libor-rate-to-brazilian-tp-controls\/<br \/>\n<\/em><\/p>\n<\/div><div class=\"fusion-clearfix\"><\/div><\/div><\/div><\/div><\/div><\/p>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":5,"featured_media":5074,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[93,86,6],"tags":[85],"_links":{"self":[{"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/posts\/5071"}],"collection":[{"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/comments?post=5071"}],"version-history":[{"count":1,"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/posts\/5071\/revisions"}],"predecessor-version":[{"id":5075,"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/posts\/5071\/revisions\/5075"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/media\/5074"}],"wp:attachment":[{"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/media?parent=5071"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/categories?post=5071"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/tags?post=5071"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}