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Brazil and the UK have signed an agreement to avoid double taxation

Brazil and the UK have signed an agreement to avoid double taxation

After five months of discussions, Brazil and the UK signed an agreement today (29) to avoid double taxation of income and to prevent tax evasion and avoidance. According to the Central Revenue Service, the move will increase legal security in transactions between the two countries and expand bilateral trade and investment flows.

According to Julio César Vieira Gómez, Special Secretary of the Federal Revenue, the expansion of the country’s tax treaty network facilitates Brazil’s accession to the Organization for Economic Co-operation and Development (OECD). Brazil is the 26th OECD member country to sign this type of agreement, joining the United Kingdom.

According to tax officials, the agreement is in line with the OECD Model Convention and the group’s plan to avoid tax base erosion and shifting of profits. With the coexistence of multiple legal and tax systems brought about by globalization, trade and investment flows are either taxed twice (once in each country) or not taxed (non-double taxation).

The Secretary of Revenue explained that the agreement aims to correct these distortions by reducing the cost to Brazil. He said the signing was in compliance with a request by companies representing the Brazilian private sector. “I believe that the signing of this convention will play an important role in increasing trade and investment, attractiveness, competitiveness of Brazilian products, legal certainty and long-term stability,” he said.

Ambassador

In addition to the Special Secretary for Revenue, the signing ceremony was attended by Melanie Hopkins, United Kingdom’s Acting Ambassador to Brazil; Marcelo Guaranis, Executive Secretary of the Ministry of Economy; and representatives of the Ministry of Foreign Affairs and the Special Secretariat for Foreign Trade and International Affairs of the Ministry of Economy.

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“This agreement will significantly increase trade between our countries, attract investment and strengthen trade relations between Brazil and the United Kingdom,” said Ambassador Melanie Hopkins. “Brazil is the largest country with which we have a close bilateral economic relationship and still does not have a double taxation agreement in place. “This is a priority for the United Kingdom and we are here to address it,” he added.

Guaranís characterized the signing of the contract as a historic moment and recalled some of the key moments in its preparation that began in June. According to the executive secretary, the speed with which the agreement was made demonstrates the effort of all the organizations involved in the task.

According to the Central Bank, Brazilian investments in the United Kingdom totaled US$5.2 billion and British investments in Brazil totaled US$25.2 billion in 2020. In turn, the trade flow (sum of exports and imports) reached 5.6 billion US dollars. 2021, according to the Foreign Trade Secretariat of the Ministry of Economy.