Brazil has introduced changes to its corporate tax payer’s registry
Starting this year, Brazil has introduced changes to its mandatory corporate tax payer’s registry (CNPJ). The main change is the requirement for corporations to identify ultimate beneficial owners. This was introduced to comply with global developments combatting tax evasion, bribery and money-laundering.
This requirement has been effective since January 1, 2017 and will apply immediately to corporations formed after this date. For companies already registered with CNPJ, there is a transition period for compliance. They have until December 31, 2018 to identify their ultimate beneficial owners.
An ultimate beneficial owner is defined as any natural person, resident in Brazil or non-resident, who directly or indirectly has a significant control in the corporate entity. A person with significant control can either have an equity interest in the corporation of 25% or more, or have the power to elect the directors of the corporation or control other corporate actions. Failure to disclose ultimate beneficial owner information may result in suspension of the corporation’s CNPJ registration, which would effectively preclude it from using the Brazilian banking system.
In addition to the standard CNPJ forms, the following documents, depending on the case, may also have to be filed:
- Bylaws or Act of Incorporation of foreign shareholders
- ID or passport for individual
- Power of attorney of local representatives
It should be noted that if these documents are written in a foreign language, authentication by a Brazilian consular office will be required.
Furthermore, it should be noted that these reporting rules do not apply to legal entities established as publicly-traded companies in Brazil, or in countries that have implemented similar disclosure rules.