So, it is finally here. Brazil has officially adopted rules against Thin Capitalization. From now on, Brazilian companies will only be entitled to acquire debt from matrix companies abroad up to double the value of its equity. Anything superior to that will not entitle the companies to deducts the payment of interests or amortization as business expenses.
The Act n. 12.249 has also imposed very hard limitation on payment remittance to companies located at tax havens.
As you can see, Brazil is adopting stricter rules on capital remittance and foreign investments. However, it should be noticed that the rules applied to portfolio investments (i.e. stocks) remain largely the same. One may conclude that the government is making the productive investments harder, while making speculative investments easier by comparison. This is an old dated paradox in Brazil
I will certainly post further observations about this new law and its implications for foreign investors.
Mostrando postagens com marcador thin capitalization. Mostrar todas as postagens
Mostrando postagens com marcador thin capitalization. Mostrar todas as postagens
quarta-feira, 14 de julho de 2010
Act. N. 12.249 - Brazil adopts rules against thin capitalization
So, it is finally here. Brazil has officially adopted rules against Thin Capitalization. From now on, Brazilian companies will only be entitled to acquire debt from matrix companies abroad up to double the value of its equity. Anything superior to that will not entitle the companies to deducts the payment of interests or amortization as business expenses.
The Act n. 12.249 has also imposed very hard limitation on payment remittance to companies located at tax havens.
As you can see, Brazil is adopting stricter rules on capital remittance and foreign investments. However, it should be noticed that the rules applied to portfolio investments (i.e. stocks) remain largely the same. One may conclude that the government is making the productive investments harder, while making speculative investments easier by comparison. This is an old dated paradox in Brazil
I will certainly post further observations about this new law and its implications for foreign investors.
The Act n. 12.249 has also imposed very hard limitation on payment remittance to companies located at tax havens.
As you can see, Brazil is adopting stricter rules on capital remittance and foreign investments. However, it should be noticed that the rules applied to portfolio investments (i.e. stocks) remain largely the same. One may conclude that the government is making the productive investments harder, while making speculative investments easier by comparison. This is an old dated paradox in Brazil
I will certainly post further observations about this new law and its implications for foreign investors.
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