The Brazil OECD Business Policy Roundtable brought together U.S. and Brazilian government officials, the OECD and industry representatives in early November to discuss taxation reform and best practices as Brazil seeks to accede to the OECD. According to USCIB Director for Investment, Trade and China Alice Slayton Clark, this is the latest of the several forums held by the Brazil Roundtable to explore changes to policy and practice – in line with OECD standards and best practices – that benefit businesses and employees while driving inclusive economic growth in Brazil.
Isaias Coelho, special advisor to Brazil’s Ministry of Economy, and Sandro de Vargas Serpa, undersecretary of Taxation and Litigation at the Federal Revenue of Brazil (RFB), detailed the regulations and legislative proposals under consideration that would simplify taxes at the state, federal and municipal levels, reforming consumption, income and international taxation practices.
“Brazil is currently undertaking significant regulatory reforms consistent with OECD guidelines including Recommendations of the Council on Regulatory Policy and Governance,” said Coelho. The ultimate hope, according to Mario Sergio Carraro Telles, executive manager of Economics for the Brazil Industry Association, is to adopt laws that simplify the tax system and reduce costs and uncertainty for companies.
Brazil has been working since 2018 in a dialogue with OECD on transfer pricing, which has evolved into a project aimed at aligning the existing transfer pricing regime with the OECD standard. This joint project was made possible with the support of UK Prosperity Fund and other OECD countries who share their experience and best practices with Brazil. The United States has bolstered this process through technical assistance and training, asserted John Hughes, director of Advanced Pricing and Mutual Agreement Program of the U.S. Internal Revenue Service.
According to OECD Senior Advisor Tomas Balco, current policies in Brazil end up double taxing multinationals, deterring foreign investment and preventing Brazil from participating fully in global value chains. Luiz de Medeiros, Brazil country manager for IBM and a USCIB member, provided details from an industry perspective, expressing “great hope” that Brazil laws can be aligned with OECD norms. Toward that end, Flávio Antônio Gonçalves Martins Araújo, head of the International Relations Office at RFB, reported that Brazil Administration currently is working on a legislative proposal to submit to Congress and start a political discussion in 2022 on a new transfer pricing law.
“It is clear from the speakers that the mood is right for reform in Brazil, and efforts are being made despite the economic challenges posed by the pandemic,” said Clark. “We hope these roundtables can inform and inspire in that regard, offering solutions for change that ease the economic burden for all.”
USCIB led the meeting, along with cohorts from the Brazil-U.S. Business Council of the U.S. Chamber of Commerce and Brazil’s National Industry Confederation (CNI). As the official U.S. representative to Business at OECD (BIAC), USCIB has been actively monitoring Brazil’s accession request to the OECD in order to advance business interest.
Additional roundtable discussions will be held throughout 2022, covering investment and trade, environment and sustainable development, as well as innovation and intellectual property. Digital and regulatory issues were discussed earlier this year.