Latin America in Focus — February 2016
Staying ahead of cross-border operations
Latin America's emergence as a world market has been, and continues to be, accompanied by an upsurge in the complexity of laws, regulations, and practices impacting cross-border operations throughout the region. Latin America in Focus shares the latest developments with consequences for the region's tax, legal, and overall business environment—developments that businesses and individuals with investments in Latin America cannot afford to ignore.
Click on any of the headings below to read more about the topic.
On 16 December 2015, the new Argentine government eased the stringent foreign exchange controls that have been in place for the past several years and that restricted the inflow and outflow of foreign currency and were accompanied by formal authorization requirements. The policy changes, which are implemented through new central bank regulations, apply immediately.
On 14 January 2016, the Brazilian government published Law 13,254/16 that establishes a repatriation disclosure amnesty regime, called the “Special Regime for Tax and Exchange Regularization” (or RERCT) that provides an incentive for Brazilian tax residents to voluntarily disclose undeclared assets maintained abroad. The new legislation is an effort by the government to increase tax collection in Brazil in light of the current economic downturn.
The São Paulo state authorities enacted Decree 61,791/2016 on 12 January 2016, introducing new rules relating to the taxation of software by ICMS (State VAT levied on goods and services) as from January 1st, 2016.
On 29 December 2015, Brazil’s National Finance Policy Council (CONFAZ) enacted a “convention” (No. 181/15) authorizing 19 states (including Rio de Janeiro, Sao Paulo and Santa Catarina) to grant a reduction in the calculation tax base for state VAT (ICMS) purposes for transactions involving off-the-shelf software, computer programs, electronic games and applications, regardless of whether they are subject to customization and regardless of the type of support (e.g. physical, digital or otherwise) provided.
The Brazilian government issued guidance (Executive Declaratory Act 3/2015) on 18 December 2015 that revokes 2010 guidance that removed the Netherlands from Brazil’s “grey list” because the Dutch government was not able to provide evidence of the existence of domestic tax legislation that could justify the non-inclusion of the Netherlands as a privileged tax regime.
The final report of the Commission for Tax Equality and Competitiveness includes a recommendation for the introduction of a new tax on business profits.
On 12 January 2016, Costa Rica’s Congress approved the tax treaty signed with Germany on 13 February 2014; the ratification still must be published in the official gazette. The treaty with Germany will be Costa Rica’s second tax treaty to enter into force (Costa Rica currently has a treaty with Spain).
On 29 October 2015, the Mexican Congress approved the reforms to existing laws, effective on 1 January 2016. This summary is not intended to cover all of the amendments made to the different articles or provisions. Therefore, its purpose is to outline those general provisions we consider most relevant.
Mexico and Argentina signed a new tax treaty on 4 November 2015. When in effect, the treaty provides for a 10% rate where dividends are paid to a company that holds at least 25% of the capital of the payer company; otherwise, the rate will be 15%.
New tax rules allow nonresidents that fulfill certain requirements to opt for an additional four-year period to operate in the country under the maquiladora shelter regime without creating a permanent establishment.
These materials are available to further support your cross-border efforts:
- 2015 Latin America M&A Guide
- BEPS: Base Erosion and Profit Shifting
- Deloitte CbC Digital Exchange (CDX)
- CFO Insights: Six steps to transforming tax
- Deloitte International Tax Source
- Country highlights
- Deloitte tax@hand
- Deloitte Legal in Latin America
- Deloitte 2015 Global Report
- Deloitte Millennial Survey 2016
For more information, please contact the Americas Tax & Legal Hub.
Note: Latin America in Focus is not intended to be an inclusive update for all Latin America countries but rather features key developments for applicable countries as available.