The Brazilian federal government has enacted a provisory measure (MP) that renews for two years certain provisions that deal with worldwide taxation set to expire as from 2023.
The first extension refers to the possibility of consolidating the P&L of all Brazilian company’s overseas subsidiaries and the second extension refers to the possibility of a presumed 9% credit on the foreign tax calculation basis, which can be used to offset the difference between the tax paid abroad (usually 25%) and that paid in Brazil (34%). This applies to overseas investees involved in manufacturing beverages and food products, construction of buildings and infrastructure projects, besides industries in general.
The Brazilian market received such extensions with tremendous relief. This is because, without renewal, both benefits would cease being effective as from 2023, making taxation of our nation’s multinationals more complex and possibly making them lose their competitiveness.