of Tax Studies (CIEST); Brazilian Institute of Financial Professionals Certification (
IBCPF) and IBCPF. Certification Committee (2003-2004). Contributor to BNA ...
Session: Some Regional Tax Developments Latin America
Ana Claudia Akie Utumi
[email protected] December 2012
Ana Claudia Akie Utumi
[email protected] − −
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Professional experience: Member of the Permanent Scientific Committee of the International Fiscal Association (“IFA”). Head of Tax Area at TozziniFreire Advogados, with over 20 years of experience in Tax Practice, including Tax Consulting Area of a former “Big Six” auditing firm, and another large Brazilian firm. Education: Doctor of Laws degree in Economic Financial Law from the Law School of Universidade de São Paulo (USP) in 2006. LL.M. in Tax Law from the Law School of São Paulo Catholic University (PUC-SP) in 2001. MBA in Finance and Capital Markets from IBMEC Business School in 1996. Graduation: Law (USP Law School, 1994) and Business Administration (Getulio Vargas Foundation, 1992) Other Professional Activities: Member: IFA and Director of Brazilian IFA Branch (Brazilian Association of Financial Law - ABDF); Brazilian Institute of Tax Law (IBDT); Brazilian Association of Tax Law (ABRADT); Brazilian Institute of Tax Researches (IPT); Brazilian Institute of Tax Studies (IBET); International Center of Tax Studies (CIEST); Brazilian Institute of Financial Professionals Certification (IBCPF) and IBCPF Certification Committee (2003-2004). Contributor to BNA Transfer Pricing Forum and BNA Global Tax Guide. Certified Financial Planner (CFP) and Trust and Estate Practitioner (TEP). Academic Activities: Visiting professor in different post-graduation courses of the most reputable business schools in Brazil, including Law School of Fundação Getúlio Vargas (FGV/RJ – 2002/2005); USP School of Economy and Administration (USP/FIPECAFI); International Business MBA Program at Fundação Instituto de Pesquisas Econômicas, in association with USP (USP/FIPE); Corporate Management MBA Program at Fundação Instituto de Administração, in association with USP (USP/FIA); among other important post-graduation courses in Brazil Publications and speeches: Author of several articles related to Tax Area, and lecturer in various seminars and conferences, local and international, including 2007 IFA Congress/Kyoto (Seminar B: International Tax Issues on Emission Allowances), 2009 and 2012 ABA Section of Taxation May Meeting, 2009 IFA Congress/Vancouver (Plenary Session II: Foreign Exchange Issues), 2012 IFA Congress/Boston (Chair of Seminar G: Developments on Latin American Cross-Border Taxation). Awards and Recognitions: Included by Latin Lawyer Magazine, in August/September 2002 edition, among “40 under 40 – Brazil’s Raising Stars” (40 leading Brazilian lawyers under 40 years old); in August/September 2003 edition among “Latin America’s Top Tax Lawyers” (Fiscal Responsibility – Latin America’s top tax lawyers); in June 2006 edition among the 40 of the Latin America's women lawyers who have excelled in their chosen area of practice (“The Glass Ceiling”). Frequently ranked among the most recognized tax lawyers in Brazil, by different companies and publications.
Recent Developments in Latin American Region − 1. Increase of Exchange of Information Participation of various countries of LA region in the OECD Forum of Tax Transparency (including Argentina, Brazil, Caribbean jurisdictions, Central America countries, Chile (OECD Member), Colombia, Mexico (OECD Member), Uruguay) LATAM countries are increasing efforts towards Exchange of Information Agreements (TEIA) – examples: • Brazil: Bermuda (June 2010), UK (Sep 2012), Uruguay (October 2012), USA (May 2007) • Mexico: Bahamas, Bermuda, Cayman Islands, Cook Islands, Netherlands Antilles • Argentina: Andorra, Bahamas, Bermuda, Cayman, China, Costa Rica, Ecuador, Guernsey, India, Jersey, Monaco, Peru, San Marino, Uruguay
Recent Developments in Latin American Region − 2. Countries moving towards substance over form and business purposes approaches Including measures to avoid abuse in the use of tax treaties In some of the countries there is still room to discuss that the form must prevail • Chile • Mexico, in certain situations Most of the LATAM countries does not count with GAAR yet
Recent Developments in Latin American Region − 2. Countries moving towards substance over form and business purposes approaches Measures already adopted against tax planning may include: • Transfer pricing • Thin capitalization rules • Black list system • Controls on offshore derivative transactions
Recent Developments in Latin American Region − 3. Changes in transfer pricing rules Chile is implementing TP rules for the first time Brazil has just approved changes to the fixed margins • Resale method – profit margins depending on the sector of economic activity • Specific methods for commodities based on international quotes
Most LATAM countries admit APA
Recent Developments in Latin American Region − 4. Indirect sale of assets (resembling Vodafone case) Most of the jurisdictions do not have specific rules about indirect sale • The indirect sale could be subject to taxation in a LATAM country if the vehicles adopted for the transaction could be disregarded due to the lack of substance and business purposes
One of the few countries to have specific legislation about this subject is Chile
Recent Developments in Latin American Region − 5. Tax haven jurisdictions Most of the countries implemented controls against tax haven jurisdictions, which include • Transfer pricing • Thin capitalization rules • Increased withholding income tax rates • CFC legislations
Generally tax haven jurisdictions defined by means of black list
Recent Developments in Latin American Region − 6. Controls and restrictions on inflows and outflows of funds Certain countries impose controls over the transfers of foreign currency to/from abroad – examples: Brazil, Colombia, Mexico, Chile Other countries impose restrictions on such transfers • Examples: – Argentina – Venezuela
Recent Developments in Latin American Region − 7. Tax incentives for foreign investors Examples • Brazil: Growth Acceleration Program (“PAC”); infra-structure incentives; incentive to invest in Brazilian financial and capital markets; incentives for private equity funds • Uruguay: Reduced taxation on foreign sourced income; Free-trade zones to implement distribution centres or manufacturing plants • Colombia: incentives in the mining and oil businesses; incentives to tourism and forestry industries • Chile: “platform companies” not subject to taxation on foreign sourced income to serve as holding companies for international investments
Recent Developments in Latin American Region − 8. Quite unique taxes Mexico: IETU – advance payment of income tax calculated on the turnover Brazil: Tax on Foreign Exchange Transactions (IOF/FX), levied on inflows or outflows of funds; Tax on Credit Transactions (IOF/Credit) Argentina: Personal Asset Tax on assets held by non-residents
Recent Developments in Latin American Region − 9. Importance of Bilateral Investment Treaties (BIT) Recent experiences in Ecuador, Venezuela, Bolivia and Argentina shows the importance of structuring inbound investments through countries that offer the protection of BITs • Western European countries may have BITs with LATAM countries • Example: Spain holds BITs with Argentina, Bolivia, Brazil, Cuba, Chile, Colombia, Costa Rica (not yet in force), Ecuador, El Salvador, Mexico, Peru (not yet in force), Uruguay (not yet in force) and Venezuela • Certain BITs provide for legal stability agreements, as it is the case of Colombia
Recent Developments in Latin American Region − 10. Treaty developments Most of the treaties to avoid double taxation (DTT) does not contain LOB clauses • They all contain exchange of information clause • Most of them do not contemplate arbitration
LATAM countries are making efforts to increase the number of DTTs in force
No treaty shopping clauses in the DTT other than beneficial ownership
Recent Developments in Latin American Region − 10. Treaty developments Brazilian Superior Court of Justice (highest level for non-constitutional matters) recently decided in favour of the application of article 07 – Business profits to avoid WHT on business income • Brazilian tax authorities do not accept this interpretation
Brazilian Supreme Court will decide within the next 2-3 years if DTTs avoid Brazilian CFC rules • VALE case – amount involved approximately USD 18 billion
