Category: Tax Insights

Azevedo Sette has advised Clube Atletico Mineiro in the transformation into SAF and in the sale of 75% of its shares to Galo Holding, Ricardo Guimaraes and FIP Galo and FIP Galo Rei for a total value of R$ 913 million. They have been working with the club, the board and the officers of Atletico for more than year in the preparation of the team to get all Board approvals, transfer the assets into a Sociedade Anonima de Futebol and assisted Atletico in the process of restructuring, M&A and filing within CADE. They have also assisted Atletico in the restructuring of Arena MRV, the transfer of Arena MRV and the Training Facilities into the SAF.

This is the largest and most complex transaction already executed in soccer in Brazil, with one of the most prominent teams in the country, a complex debt structure, in addition to a brand new stadium and a combination of investors.

Azevedo Sette’s partners Luiz Sette and Luis Miraglia led the series of transactions that culminated in the signing on September 1st with the help of Tax Partner Bruno Felippe Almeida, antitrust Partner Luiz Salles, Senior Associates Natalia Meirelles Barros and Pedro Henrique De Castro Oliveira and contribution of Lorena Pretti Seraglio, Bruna Bigas, Gabriela Lima Nogueira and Matheus Araujo Aiala Agostinho.

Read the full article here.

Read the full article here.

As early as the 70s, Cameroon negotiated and signed several important texts aimed mainly at avoiding double taxation of income from foreign business activities in Cameroon and preventing tax evasion or establishing mutual assistance rules in tax-related matters.

As of December 31^st, 2022, there are ten tax treaties in force in Cameroon. These include bilateral treaties between Cameroon and countries such as the French Republic; Canada; Tunisia; the Swiss Confederation; the Republic of South Africa; the Federal Republic of Germany; and the Kingdom of Morocco and multilateral conventions such as the double taxation convention on income between CEMAC member states; the convention on mutual administrative assistance in tax matters drawn up in 1988 and amended in 2010; and the Multilateral Convention to implement tax treaty-related measures to prevent base erosion and profit shifting.

Other than the above treaties, foreigners (natural persons or companies) without a head office in Cameroon but carrying out business activities therein are subject to registration and tax declaration formalities.

Registration and tax declaration of foreign business activities in Cameroon

In Cameroon, save the existence of a treaty for the avoidance of double taxation of income, foreigners without a head office in Cameroon but carrying out business activities therein must be registered with the tax administration and make the required tax declarations.

For the registration and tax declaration formalities, the foreigner must appoint a solvent representative accredited by the tax authorities. Upon this registration, a Tax Identification Number (TIN) shall be granted to the foreigner to make the required tax declarations.

In consideration of the income derived from their activities in Cameroon, these foreigners are required to spontaneously declare and make an advance payment representing either 2%, 5%, 10%, 14%, or 20% of their turnover generated during the previous month no later than the 15^th of each month, depending either on their tax system or the nature of their activities. This advance payment is increased by 10% for the additional communal centimes.

Furthermore, these foreigners shall file an annual declaration of the results obtained from their operations during the previous year no later than the 15^th of March of each year.

From the above, respecting the registration and tax declaration formalities shall enable foreigners without a head office in Cameroon to securely carry out business activities.

The specific case of foreign operators of electronic commerce (e-commerce) platforms in Cameroon

Operators of e-commerce platforms with no head office in Cameroon must apply to be registered with the Cameroonian tax authorities, failure of which, access to the said platform shall be suspended on the Cameroonian territory.

The formalities for registration, declaration, and payment of taxes collected by the e-commerce platforms can be done online through the Internet portal of the tax administration.

 

For more information on this topic please contact our member 4M Legal and Tax

On December 28, 2021, the American Treasury Department released final regulations (TD 9959, Final Regulations) regarding foreign tax credit (FTC) to be offset in the USA. In a nutshell, according to the referred legislation, in order to be offset, the tax paid abroad must be reasonably similar to US tax rules.

Brazilian tax legislation does not hold the principles that would allow Brazilian FTC in the US under TD 9959. Brazil levies withholding taxes (WHT) at the payment source, unlike the production source required by the new US legislation. Additionally, Brazilian transfer pricing (TP) rules are not currently under Organisation for Economic Co-operation and Development (OECD) guidelines, i.e., the arm’s length principle (ALP) is not strictly observed.

In this sense, if there is a WHT burden on a remittance from Brazil to the US, the WHT offset would not be allowed for the American taxpayer. Also, considering the scenario of a Brazilian company as a subsidiary of an American entity, there would be no FTC regarding Global Intangible Low-Taxed Income (GILTI) legislation – American Controlled Foreign Companies (CFC) rules.

Nevertheless, Brazil has initiated its accession process for OECD membership. A Roadmap was published by the Organization on June 10, 2022, which says that OECD Committees will evaluate Brazilian legislation and propose alterations to enable Brazil’s accession. The Federal Decree #11.105 was published in Brazil on June 27, 2022, determining the domestic groups that will develop the analysis along with OECD Committees.

Brazilian Federal Revenue (RFB) already initiated the studies about the legislative changes that are needed regarding TP: a new approach under OECD guidelines was presented by the RFB, which affirmed that the respective bill will be available soon in order to start the legislative process. A seminar hosted by RFB and IDB (Inter-American Development Bank) occurred on June 29, 2022, demonstrating the updates on the convergence towards OECD standards. The private sector was invited to present its inputs and multiple countries’ representatives shared their experience with OECD guidelines so that Brazilian tax authorities could be prepared regarding its system.

In addition, international commerce organizations have been discussing the TD 9959 with the Brazilian Economy Ministry, pointing out that there will be a double taxation between Brazil and the US. At a recent meeting, it was proposed that Brazil should request US Treasury an extension of two (2) years for starting the application of the new rules, so that Brazil would have time to accommodate US requirements on its legislation. The new approach for TP and the negotiation of a Double Tax Treaty (DTT) were also discussed, focusing on having the TP bill as soon as possible and then initiating the DTT discussions.

At the seminar which took place on June 29, however, the USA representative said that the Final Regulations will need to be applied by the end of 2022 and that the observance of the ALP in Brazil is a condition to start the discussions for the DTT.

We emphasize, though, that there is no need to have a DTT in order to have FTC in the USA: if the TD 9959 requirements are met, the credit is allowed. Additionally, before the Final Regulations, it was possible to offset Brazilian FTC in the US.

Taxpayers should, therefore,  observe the next steps in Brazil’s convergence towards OECD guidelines, especially regarding the possibility of American entities offsetting Brazilian FTC.

We are pleased to inform you that a Tax Practice Group has been established within the LNI.

The Group members will meet online twice a year to share industry news, opportunities and expertise. Additional meetings may be scheduled on an ad-hoc-basis.

We will be exchanging information on the latest case law, and discussing how we can work together to promote our services to reach a wider audience.

To join the LNI Tax Group, please contact the group Chairperson Nina Kuntschik at Nina.Kuntschik@snp-online.de