Protocol of amendment to the Convention between Brazil and Argentina to avoid double taxation
On August 28th of 2018 was enacted, through Decree nº. 9482/18, the Protocol of amendment to the Convention between Brazil and Argentina to avoid double taxation.
The Protocol comes in order to modernize the Convention between both countries, stimulating investments and a greater exchange of information between them.
There are relevant aspects such as the incorporation of minimum standards of the Tax Base Erosion Project and Transfer of Profits (BEPS Project), which, in general terms, inhibit abusive practices in international structures.
In this context, find below the main changes implemented:
i. Limitation of the Income Tax taxation on dividends, interest and royalties in relation to the contracting State in which the company source of the payment is located, with maximum rates of 10% or 15% (depending of the case);
ii. Change in methods to avoid double taxation - Brazil included the credit system to replace the exemption of dividends from companies of the same group in Argentina and exemption in Argentina for all types of taxable profits in Brazil;
iii. Inclusion of a benefit limitation clause, in order to formalized the need of an economic/negotiation purpose for operations that are subject to a specific benefit provided in the Treaty;
iv. Modification of the hypotheses list that do not qualify permanent establishment, including the maintenance of a fixed installation with the sole purpose of developing an auxiliary and preparatory activity.
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