Tax Havens in Brazil

June 25, 2021

The term “tax haven” has been recurrently used in the last decades, as these are considered as countries or territories that contribute to aggressive tax planning, evasion, or asset laundering.

According to the aforementioned, the different legislations have regulated in their tax systems rules in which tax havens can be identified and the pricing treatment agreed with companies residing in them through Transfer Pricing regimes.

In Brazil, Article 24 of Law No. 9430 states that these valuation rules shall apply to transactions carried out with a natural or legal person resident in tax-favored countries who do not tax income. Otherwise, they are taxed at a rate below 20%.

So, this article explains the Tax Havens functions regarding the Brazilian legislation.

What is a Tax Haven?

A tax haven is a country or territory considered to have low or no taxation due to often free of taxation or have low tax rates compared to other countries, is also characterized by little transparency or information access for investors.

Which countries are considered tax havens by Brazil?

Brazil issued a list of tax-favored countries or “tax havens” in June 2010, through Normative Instruction N°1045 published by the Receita Federal Do Brasil or Federal Revenue of Brazil (RFB).

However, this has been modified over the years, being the last modification by Normative Instruction No. 1896 of 2019, in which the Republic of San Marino is excluded from the list of countries or facilities with favored taxation and privileged tax regimes.

This exclusion was based on two criteria:

  • Fiscal transparency on the information of the companies located there.
  • The demonstration of having a maximum general income tax rate of 17%.

Thus, the new list of tax-favored countries or territories in Brazil are:

Andorra Grenada American Samoa
Anguilla Hong Kong Western Samoa
Antigua and Barbuda Kiribati St. Helena Islands
Aruba Lebuan St. Lucia
Ascension Islands Lebanon Federation of Saint Kitts and Nevis
Bahamas Community Liberia São Pedro e Miguelão Island
Bahrein Liechtenstein San Vicente and Las Granadinas
Barabados Macao Seychelles;
Belice Maldivas Salomon Islands
Bermudas Islands Man Island Swazilandia
Brunei Marshall Islands Sultanate of Oman
Campione D ‘Italia Mauricio Islands Tonga
 Islas del Canal (Alderney, Guernsey, Jersey, ds7Sark) Monaco Tristão da Cunha
Cayman Islands Montserrat Islands Turcas y Caicos Island.
Cyprus Niue Island Vanuatu
Cook Islands Norfolk Island U.S. Virgin Islands
 Djibouti Panama British Virgin Islands
Dominica Pitcairn Island Curaçao
United Arab Emirates French Polynesia São Martinho
Gibraltar  Queshm Island Ireland