Tax And Criminal Amnesty Program For Non-Declared Assets

Law no. 13.254/2016 concerning the amnesty program for assets held outside Brazil and non-declared to the Brazilian Federal Revenue ("RFB") and to the Brazilian Central Bank ("BACEN") was published today (January 14, 2016). It presents taxpayers with an opportunity to disclose ownership of undeclared assets held outside the country with the benefits of (i) reduced taxes and penalties, and (ii) a general amnesty for criminal purposes. This is an unique opportunity that will not be presented again so soon.

To put this measure in perspective, Brazilian tax authorities are currently engaged in efforts to improve cross-border exchange of information. In 2015, Brazil started the automatic exchange of information with the United States, receiving, according to the RFB, data of approximately 25,000 bank accounts held by Brazilians in that country. In addition, in 2018, Brazil will start the automatic exchange of information with more than 60 countries that signed the Common Reporting Standard ("CRS"), providing and receiving information regarding the years of 2016 and 2017, as well as the following years.

According to the new law, the amnesty program will be applicable to assets held outside the country or already remitted to Brazil with a lawful origin. The lawful origin must be proved through evidence of origin. The President vetoed the possibility of including in the amnesty "jewelry, precious stones or metals, works of art, antiquities with historic or archaeological value, pets and genetic material for animal breeding".

The assets included in the amnesty program must be recorded in the name of the taxpayer, a trust, a foundation or a pass-through entity; or be kept by an individual or a company, with legal personality or not, for the custody, deposit, investment, possession or property on behalf of the beneficial owner, his representative or agent. Otherwise, the assets may not be included in the amnesty program (for example: assets held in the name of a relative, as if he/she owned them, without any formal agreement of deposit or custody).

To join the amnesty program, the applicant will be required to:

(i) Fill out the Amnesty Statement ("Declaração Única de Regularização");

(ii) Amend the Annual Income Tax Return ("Declaração de Ajuste Anual" - "DIRPF") of the calendar year 2014 to include the new information;

(iii) Amend the Report of Foreign Assets ("DCBE") of the calendar year 2014;

(iv) Have documents that prove the lawful origin of the...