The ultimate parent entity, or another entity that is a Brazilian tax resident, is required to submit the CbC report. An entity other than the ultimate parent can submit the report if the ultimate parent entity is not required to submit the report in its tax jurisdiction of residence; the ultimate parent’s tax jurisdiction of residence does not have a competent authority agreement with Brazil by the deadline for submitting the report; or there has been a systemic failure in the ultimate parent’s tax jurisdiction of residence and the Federal Revenue of Brazil (RFB) has notified the resident entity of this failure.
The Brazilian tax resident entity (other than the ultimate parent) is not required to submit the report if a surrogate entity is available and all of the following apply:
- The surrogate entity’s jurisdiction of tax residence requires CbC reporting.
- The surrogate entity submitted the report to its tax administration within 12 months from the last day of the group’s reportable fiscal year.
- The surrogate entity’s jurisdiction of tax residence has signed a competent authority agreement with Brazil.
- The surrogate entity’s jurisdiction of tax residence has not notified the RFB of a systemic failure.
- The surrogate entity informs its tax jurisdiction that it is the reporting entity.
- The RFB has been informed of the reporting entity’s identification.
Each entity that is a Brazilian tax resident is required to inform the RFB if it is the ultimate parent, surrogate entity or if neither, the identity and tax jurisdiction of residence of the reporting entity.
CbC reports are required for multinationals with a total consolidated revenue in the previous fiscal year of at least R$2,260,000,000, if the ultimate parent is tax resident in Brazil; or €750,000,000, or the local equivalent, based on the exchange rate as of January 31, 2015. CbC reports should include the following information:
- In each jurisdiction the group operates, aggregate information on:
- Revenue from related and unrelated parties.
- Profit (loss) before income tax.
- Income tax paid.
- Income tax due.
- Share capital.
- Retained earnings.
- Number of employees.
- Tangible assets other than cash and cash equivalents.
- For each entity in the group, include tax jurisdiction of residence or location of establishment, and nature of its main economic activities.
A Brazilian tax resident entity that fails to submit the CbC report or submits a report with omissions or inaccurate information will be subject to various penalties.
The first CbC report should be filed with respect to fiscal year beginning January 1, 2016.
On October 21, 2016, the OECD announced that Brazil signed the Multilateral Competent Authority Agreement for the automatic exchange of country-by-country reports ("CbC MCAA"). Under the CbC MCAA, signatories may exchange CbC reports with other signatories if they have CbC reporting requirements in place and are a party to the OECD Convention on Mutual Administrative Assistance in Tax Matters.