FATCA and its effects on Brazil

FATCA (Foreign Account Tax Compliance Act) is an American Law, approved in 2010, with the aim of preventing tax evasion in the United Statesby taxpayers with accounts and assets abroad, creating an obligation to international financial institutions to provide information about goods owned by citizens, residents and American companies, thus obliging them to pay taxes on profits gained abroad, as part of the Hiring Incentives to Restore Employment (HIRE) governmental program.

In 2013, Brazil enacted a treaty signed with United States, which determines the exchange of tax information of their citizens, permanent residents and legal entities.Pursuant to this treaty, the requesting country, through the competent authority, may request information from its taxpayers in the requested country. The request must be as complete and specific as possible, particularly with regard to the reasons that lead the authority to believe that the requested information may be necessary to comply with its tax laws.

Furthermore, the countries are obliged to do everything possible, under their respective applicable laws and procedures, to obtain the information requested by the requesting country.

Although some news articles address the subject of this Law, they have not comprehensively mentioned the real reflections to Brazilians who have bank accounts, goods or companies abroad.

With this new legislation, Brazilian Federal Revenue will, at the same time, be able to obtain the necessary information to investigate, detect and punish, if necessary, all people or companies that do not report amounts received abroad, and set up measures inhibiting and preventing tax evasion in Brazil.

As a result, all Brazilian entities or individuals should ascertain if their bank accounts, assets and stocks that might be subject to this Treaty have been duly reported to the Brazilian tax authority, as to avoid any future punishment.

Julio Cesar Alves - Brazilian Lawyer, member of the São Paulo Section of the Brazilian Bar Association (OAB) whose practice focuses on Corporate, Contract and International Law (julius.caesar1@gmail.com).

Sandra Emilia Guglielmi Barreto – Brazilian Lawyer, member of the São Paulo Section of the Brazilian Bar Association (OAB), graduated by Pontificia Universidade Catolica, with specialization in agreements, with the graduation recognized in Italy, certificate in "The Economy of European Union", the Istituto per gli Studi di Politica Internazionale, assistant in International Law at the Pontificia Universidade Catolica, whose practice focuses on Corporate, Contract and International Law (sandraegbarreto@gmail.com).