Legislation

Corporate Income Tax: Compensation of IRPJ incurred abroad

Federal Revenue of Brazil published COSIT Consultation Solution 185, on October 22, 2018, the clarifying that for offsetting income taxes abroad, on the profits, income and capital gains computed in the real profit, the document proving the payment or collection of income tax paid abroad. Such document must be recognized by the collection agency of the country in which the collection took place and by the Consulate of the Brazilian Embassy.

In cases where the legislation of the country of profit origin requires the withholding of the tax at source, one shall prove the withheld IRPJ by means of a collecting agency or the paying source’s official document.

The standard also clarified the recognition of the document proving the payment or collection of Income Tax paid abroad through the Consulate of the Brazilian Embassy can be replaced by the apostille, which deals with the Convention on the Elimination of the Requirement of Legalization of Public Documents Foreigners, promulgated by Decree 8.660/2016, within the framework of the signatory countries.