The term to apply for the RERCT – Special Currency and Tax Regularization Regime, also known as Repatriation Law, is open since the 4?? of April 2016.
The RERCT, established by Law n.º13.254/16 and regulated under Internal Revenue Service’s Normative Instruction n.º 1.627/2016, allows the regularization and repatriation of legal assets and resources held abroad, that have not yet been declared or that are incorrectly declared, by individuals and companies resident or domiciled in Brazil. Such Law provides for exemption of civil, criminal and administrative penalties that could apply to these situations.
In addition to financial assets, shareholdings and real estate’s must also be declared, as well as intangible assets, such as trademarks, patents, software and others, and also vehicles, aircraft, vessels and other all property’s that are subjected to regular statements to Brazilian authorities.
The deadline to apply for the RERCT is October 31,2016. Taxpayers must meet the following terms:
- Present a statement of Currency and Tax Regularization (Dercat) to the IRS (voluntarily statement of new facts that are not challenged in courts); a copy of which will be sent from the IRS to Brazilian’s CENTRAL BANK directly;
- Full payment of Income Tax, calculated by the rate of 15% upon the value of the resources that are being submitted to regulation; and
- Full payment of the fines, valued in the same amount as the tax owed.
The Dercat shall be electronically prepared and must contain a detailed description of resources, assets and rights, as well as their respective values. They must be valued upon the market’s value in Reais, as well as in foreign currency, considering the dollar price set for sale by BACEN on December 31, 2014, which was R$ 2.6562.
The Decart must contain the following statements:
- That the assets and rights were legally obtained, by regular economic activities and that the information declared is accurate;
- That the applicant is not party to any criminal lawsuit, even if has not yet been sentenced, if the crime concerning is one of those quoted on the 5th article of Law nº 13.254/2016;
- That the applicant was a tax resident or domiciled in Brazil on December 31, 2014; and
- That the applicant did not work for the Brazilian government, with a public job or function, as well as did not have relatives in those conditions
The assets reported on Dercat shall also be declared to:
- The IRS, by a rectification of the Annual Adjustment Statement of the year 2014 (“Tax Returns”), informing the undeclared funds from that year and every year from then on;
- The Central Bank, in an adjustment statement of Declaration of Properties and Resources Abroad, concerning the year of 2014 and from then on;
- The company’s Financial Statements for the year of 2016 and from then on.
Other relevant aspects:
- Tax debts will be pardoned and there will be a 100% reduction of penalty’s owed due to tax assessments made from January 14, 2016 on, directly concerning the assets and rights being declared, making it impossible for the IRS to collect other taxes, such as PIS/COFINS, IPI, II, CIDE and CSLL, upon the same tax matter, gaining a full pardon and amnesty of the penalty’s incurred by Law.
- Exemption from the penalty’s applied to matters under the value of R$ 10,000.00 (US$ 3,764.77) in outsourced accounts, per person, converted to Dollar on December 31, 2014.
- The profits made from outward remittances and earned from December 31, 2014on must be included on these statements, and there must be tax payment upon these incomes. If you declare and pay the taxes within time of RERCT, the penalty’s fees can be dropped.
- The statement cannot be used as the only indication or purpose for prosecutions or investigations, and it cannot justify administrative procedures for tax or foreign exchange policy matters.
Azevedo Sette tax consultants remain at your disposal for any further additional explanations that may be necessary.