Provisional Measure 1.171/2023 ' New Tax Rules On Foreign Investments

• Published date: 07 June 2023
• Subject Matter: Government, Public Sector, Tax, Inward/ Foreign Investment, Income Tax, Capital Gains Tax
• Law Firm: Withers LLP
• Author: Ms Christina M. Baltz, Aline Klaus Recktenwald and Gabriela Ghelman

The presidency of Brazil published Provisional Measure 1.171/2023 on Sunday, April 30, which imposes income tax on controlled foreign (non-Brazilian) corporations owned by Brazilian tax residents. It also clarifies the tax treatment of trusts with respect to both income and capital gains produced by trust assets and the tax treatment of distributions made to beneficiaries.

We are working closely with our Brazilian counterparts to understand the application and potential impact of the proposed new rules on trust structures established by our Brazilian clients. These typically do involve foreign (non-Brazilian) entities, including entities formed in U.S. jurisdictions such as...