United Kingdom approves agreement with Brazil that makes double taxation more difficult

Agreement

Taxation will occur only once, helping to fight tax evasion

Eight months after signing by Brazil and the United Kingdom, the British Parliament approved the agreement that avoids double taxation on income and prevents tax evasion and avoidance in both countries. To enter into force, the document still needs to be ratified by the Brazilian Congress.

The vote in the British parliament took place on Wednesday (19), but was only announced on Thursday (20) by the British Embassy in Brazil. According to the embassy, ​​the agreement strengthens trade between the two countries, a measure defended by President Luiz Inácio Lula da Silva on a visit to London in May.

“In addition to representing a response to requests from the business community of both countries, the measure is in line with the ambitions of President Lula and Prime Minister Rishi Sunak to create new opportunities for trade and investment between the two countries. This desire to strengthen bilateral trade was made public during the official visit of the Brazilian president to London in May of this year”,

highlighted the embassy in a note.

The agreement prevents transactions between Brazil and the United Kingdom for the payment of dividends, royalties, services, interest and other types of payment from being subject to tax on income or profit twice (once in each country). Taxation will occur only once, providing more legal certainty and helping to fight tax evasion.

earnings

According to the British Embassy, ​​the agreement will allow companies from both countries to import technologies and services not available in the domestic market to increase production and competitiveness. Many resources currently used to pay taxes twice, emphasizes the embassy, ​​can be reallocated for investments, including research, innovation and development.

Aligned with the guidelines of the Organization for Economic Cooperation and Development (OECD) to avoid erosion of the tax base and the transfer of profits to tax havens, the non-double taxation agreement also helps combat tax evasion and avoidance (when companies take advantage of loopholes in the legislation to avoid paying taxes). This is because there will be more exchange of information in tax collection, improving efficiency and rationality in tax collection.

According to the Federal Revenue, with the coexistence of several legal and tax systems brought about by globalization, trade and investment flows were taxed twice (once in each country) or not taxed at all (double non-taxation). The agreement seeks to correct these distortions.

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