Country-by-Country (CbC) Reporting is part of BEPS - Base Erosion and Profit Shifting project, coordinated by the Organization for Economic Cooperation and Development (Organização para Cooperação e Desenvolvimento Econômico - “OECDE”), and its filing, when required, is performed through ECF - Block W.
The report acts as an annual statement, where multinational groups should provide to the tax administration of the residence jurisdiction for tax purposes of their final controller with various information and indicators related to the location of their activities, the global allocation of income and taxes paid and due.
The Brazilian company final controller of a multinational group is required to file the Country-by-Country Report.
The Brazilian entity that is not a final controller will also be required to file CbC when one of the following situations occurs:
a) inal controller of the multinational group is overseas and is not required to report within its jurisdiction;
b) the residence jurisdiction of the final controller for tax purposes has an international treaty with Brazil, but no agreement between the competent authorities and Brazil until the reporting date. This date has the ECF filing as deadline;
c) system failure in residence jurisdiction of the final group controller for tax purposes, the entity member resident in Brazil for tax purposes being notified by the Federal Revenue (RFB). The local entity that is not the final controller of the group will not be required to file the report if the multinational group has made it available through a substituting entity that meets specific premises.
Multinational groups that are exempt from CbC Reporting are those whose total consolidated revenue in the fiscal year prior the reporting financial year, as reflected in the consolidated financial statements of the ultimate controller, is less than:
Important: The entity residing in Brazil that is an exempt multinational group member, must inform the RFB in ECF - Block W, the appropriate justification.
The CbC must be reported by the last business day of July of the year following the transactions. In 2018, the deadline is July 31.
A Brazilian entity that fails to comply with the Country-by-Country obligations or complies with any inaccuracies or omissions shall be required to comply with them or provide its clarifications within the deadline stipulated by the tax authority and subject to the following penalties:
a) due to extemporaneous presentation:
Note: The penalty for filing after deadline will be reduced by half when the obligation is met before any RFB ex officio procedure.
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