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Brazil Consults On Changes To DTA Mutual Assistance Procedure

by Mike Godfrey,, Washington

24 August 2016

Brazil's Department of Federal Revenue has released a brief consultation on proposals to improve the workings of the mutual assistance procedure in Brazil's double tax treaties.

The changes are intended to respond to Action 14 of the OECD's base erosion and profit shifting (BEPS) recommendations.

The MAP enables treaty signatory countries to more easily resolve issues arising from the application of a double tax treaty, such as where the income of a company or individual doing cross-border business is inappropriately taxed twice.

According to the Department of Federal Revenue, the proposals will increase levels of transparency surrounding the mutual assistance procedure so that corporate and individual taxpayers are more able to take advantage of the benefits of double tax treaties.

The OECD's work under Action 14 is intended to ensure that the mutual assistance procedure is applied consistently among all territories and expeditiously.

Action 14 contains a minimum standard with respect to the resolution of treaty-related disputes, with implementation monitored through a peer-based review mechanism. Some countries have gone further by committing to provide for mandatory binding arbitration in their bilateral tax treaties as a mechanism to guarantee that treaty-related disputes will be resolved within a specified timeframe.

The draft normative instruction issued by Brazil's Revenue Department on August 19 would seek to establish the minimum standard under Action 14. The proposed measures require that: obligations in relation to mutual assistance procedures are implemented in good faith and disputes are resolved quickly; administrative processes that promote the timely resolution of disputes are fully implemented; and taxpayers have full access to the mutual assistance procedure.

The Revenue Department is accepting comments on the proposals until August 26.

TAGS: tax | double tax agreement (DTA) | tax avoidance | Brazil | standards | mutual assistance agreement | BEPS

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