After five months of discussions, Brazil and the United Kingdom signed today (29) agreements for the avoidance of double taxation on income and the prevention and avoidance of tax evasion. According to the Federal Revenue Service, the measure will increase legal security in transactions between the two countries and will lead to the expansion of bilateral trade and investment flows.
According to the Special Secretary for Federal Revenue, Julio César Vieira Gómez, expanding the country’s network of tax treaties helps Brazil’s accession process to the Organization for Economic Co-operation and Development (OECD). The United Kingdom is the twenty-sixth member country of the Organization for Economic Co-operation and Development with which Brazil has signed this type of agreement.
According to the tax authorities, the agreement is in line with the OECD model agreement and with the group’s project to avoid tax base erosion and profit shifting. With the coexistence of many legal and tax regimes brought about by globalization, trade and investment flows have been taxed twice (once in each country) or not at all (non-double taxation).
The Minister of Revenue explained that the agreement intends to correct these distortions and reduce the cost of Brazil. He said that the signing corresponds to the request of the entities representing the Brazilian private sector. “I hope that the signing of this agreement will play an important role in increasing trade and investment, the attractiveness of Brazilian products, their competitiveness, legal certainty, and long-term stability,” he said.
In addition to the Special Secretary for Revenue, the signing ceremony of the agreement was attended by Melanie Hopkins, the UK’s Interim Ambassador to Brazil. Executive Secretary of the Ministry of Economy, Marcelo Guaráñez; And representatives of the Ministry of Foreign Affairs and the Special Secretariat for Foreign Trade and International Affairs at the Ministry of Economy.
“This treaty will have the potential to significantly increase trade between our two countries, as well as attract investment and strengthen trade relations between Brazil and the United Kingdom,” said Ambassador Melanie Hopkins. “Brazil is the largest country with which we have a close bilateral economic relationship and with which we do not have a valid double taxation agreement. This is a priority for the UK and we are here to deal with it.”
Guaráñez classified the signing of the agreement as a historic moment and recalled some of the key moments of the preparation for it, which began in June. According to the Executive Secretary, the speed in building the agreement is indicative of the effort of all the bodies involved in the work.
According to the Central Bank, Brazilian investment in the UK totaled $5.2 billion, and British investment in Brazil totaled $25.2 billion in 2020. In contrast, trade flow (the sum of exports and imports) amounted to $5.6 billion in 2021, according to Amanat Foreign trade at the Ministry of Economy.
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