FIUS International News | April 2024
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TAXATION IN BRAZIL OF FOREIGN INCOME AND CONTROLLED FOREIGN ENTITIES: CHANGES FOR 2024
The year 2023 was marked by significant tax changes in Brazil, with the most important milestone being the approval of the Indirect Tax Reform (Constitutional Amendment No. 132). However, among other important changes that occurred in the past year, the approval of Law No. 14,754, informally called the “Offshore Law”, was noteworthy, as it addresses the taxation of foreign income earned by individuals in Brazil, and it provides differentiated tax treatment for certain controlled foreign entities by individuals. Therefore, it is important for individuals residing in Brazil who receive income from abroad and for companies based outside Brazil to consider the changes.
BRAZILIAN SUPREME FEDERAL COURT MAINTAINS THE BREAKING OF RES JUDICATA IN TAX MATTERS
The Brazilian Supreme Federal Court, on April 3, upheld the breaking of res judicata in tax matters. This is because six out of the eleven Justices voted against the declarations of objections from companies that aimed at modulating the effects of the Supreme Court’s decisions. It is important to mention that in 2023, the Court’s understanding was for the due payment of tax on Profit Contribution since 2007.
The issue was brought to the physical plenary session after a request for emphasis by Justice Luiz Fux, and the analyses began in November 2023. However, the case was suspended due to a request for further examination by Justice Dias Toffoli.
ALREADY CONVICTED IN THE U.S. OF INSIDER TRADING, BRAZILIAN LAWYER IS ALSO UNDER INVESTIGATION IN BRAZIL
R.C.D.C.N., a former member of an important Brazilian law firm, was a visiting attorney employed by Gibson, Dunn & Crutcher in the U.S. In August 2023, the U.S. attorney for the District of Columbia accused him of using his position at the firm to access privileged and confidential client files and using material non-public information regarding the purchase of CTI BioPharma Corp. by Orphan Biovitrum AB, among other deals. He made more than $42,000 in profits in the merger by selling 10,400 shares after the deal was announced.
THE COST OF DATA BREACH: THE IMPORTANCE OF INVESTING IN INFORMATION SECURITY AND REGULATORY COMPLIANCE
The average cost of a data breach has reached a new all-time high for organizations, as revealed in the “Cost of a Data Breach Report 2023”, the result of a global survey conducted independently by the Ponemon Institute, sponsored and published by IBM. The study analyzed 553 organizations impacted by data breaches in 16 different countries during the period from March 2022 to March 2023.
The aim of the report is to provide essential information to help security and IT teams manage their risks more effectively and limit the potential for losses. In this regard, the survey highlights some important points for organizations to note.
NDAS IN INTERNATIONAL TRADE NEGOTIATIONS
A non-disclosure agreement (NDA or in the plural NDAs) is a legal document used to ensure that certain information and intellectual property will remain confidential, playing a crucial role in business negotiations by protecting classified information, as agreed between the parties. This document can be signed by two or more parties, including (i) legal entities; (ii) individuals; or (iii) both of them.
This legal document, once signed by both parties, is of great assistance to create trust and reassurance among them by outlining the terms and conditions under which sensitive information can be shared and used, even after the end of the contractual term that gave rise to it.
GUN JUMPING: PRECAUTIONS TO AVOID INFRACTIONS BEFORE CADE
The Administrative Council for Economic Defense (“CADE”) is a Brazilian governmental agency responsible for analyzing corporate transactions that may impact the market and free competition. Corporate transactions, which may include mergers, acquisitions, asset purchases, and joint ventures, must be submitted to CADE for approval if, in the year prior to the transaction, at least one of the parties involved had gross annual revenue or total business volume in Brazil equal to or greater than BRL 750 million and at least one other party involved in the transaction had gross annual revenue or total business volume in Brazil equal to or greater than BRL 75 million. In 2023, CADE reviewed 611 concentration acts, approving 594 transactions with an average review period of 21.5 days.
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THE CONTRIBUTION OF INTELLECTUAL PROPERTY TO GLOBAL PROGRESS
Intellectual Property protection is an essential pillar for the global economy, since it protects investments of time and money made by a person or corporation to develop an invention. In this way, legal protection of intellectual property rights provides security to boost innovation, to foster creativity and fuel economic development by creating an environment that encourages investment in research and development (R&D).
Intellectual Property has positive impacts on the global economy, as demonstrated in the pharmaceutical sector, for example, where most essential products listed by the World Health Organization have been a result of intensive research protected by patents, contributing to improve and save lives worldwide.
IACHR SENTENCES BRAZIL FOR 12 EXECUTIONS IN 2002 POLICE OPERATION
The recent sentencing of the Brazilian government by the Inter-American Commission on Human Rights (IACHR) has brought to light one of the darkest episodes in the country’s history: the so-called “Operation Castelinho”. In 2002, 12 people were killed by the Military Police of S?o Paulo, raising suspicions of execution. The trial, named “Airton Honorato vs. Brazil,” represented a battle for justice, led by the Citizenship and Human Rights Center of the Public Defender’s Office of S?o Paulo.
The court concluded that the deaths were planned and carried out by state agents, marking a tragic chapter in Brazil’s human rights history. The judgment highlighted the lack of adequate investigations, as well as tampering of the crime scene, which hampered the efforts of the victims’ families in seeking justice.
LEGAL ASPECTS OF EXTRADITION IN BRAZIL: WHAT IS IT AND HOW DOES IT WORK?
Extradition involves the cooperation between nations, in which one country requests the transfer of an individual from another country to face criminal trial or serve a pre-established sentence. This mechanism aims to suppress crimes through international legal cooperation, preventing individuals who have committed a crime from seeking refuge in another country, and ensuring that they do not escape punishment.
It’s important to highlight that extradition is different from expulsion or deportation, as it only occurs to individuals who are subject to or have been sentenced in criminal proceedings.
END OF DISABILITY RETIREMENT AND RESPONSIBILITY FOR THE EMPLOYEE RETURNING TO WORK
Currently, the Brazilian Social Security Institute (INSS) is becoming more aware and vigilant to possible pensions/benefits that are no longer necessary. In fact, this Institute frequently organizes task-forces with experts (usually physicians) to determine the actual situation of the beneficiaries.
As an example, we can mention the lawsuits on disability retirement, which can last for many years, in which case does it make sense for the INSS to verify the beneficiary’s condition, to determine the maintenance or the end of such benefit.
ENVIRONMENTAL COMMITMENT: HISTORIC STF DECISION TO PRESERVE THE AMAZON RAINFOREST
In a landmark decision, the plenary of Brazil’s Supreme Federal Court (STF) has taken a significant step towards combating deforestation in the Amazon Rainforest. The unanimous ruling mandates the federal government to take action under the Action Plan for the Prevention and Control of Deforestation in the Legal Amazon (PPCDAm) and other programs to drastically reduce deforestation rates. The ambitious goal is to bring down deforestation to 3,925 square kilometers annually by 2027 and to zero by 2030.