Brazilian interest on net equity rules remain unchanged

Brazil_IIOn 30 September 2015, the Executive Branch of the Brazilian government released a Provisional Measure 694/2015 (PM 694), which was supposed to add a new deductibility limitation for interest on net equity (INE) for Brazilian income tax and social contribution tax purposes, and which additionally sought to increase the income tax withholding rate on INE payments to non-resident shareholders.

However, due to lack of action by the Brazilian Congress to convert the provisions of PM 694 into law (in its existing form or with amendments), the PM expired as of 9 March 2016. The expiration was confirmed by a notice released by the Brazilian Senate on the same date.

Hence, as for now, the Brazilian INE rules remain unchanged. However, as it is possible that the proposed amendments will be reintroduced in a future PM, multinational companies that own Brazilian entities should continue to monitor developments related to INE payments.


Read more about the PM 694 in our newsletter.


If you┬┤re interested in this topic or have any questions connected with it, please feel free to contact our experts:

Daniel Gremaud
Partner, Leader Tax & Legal Romandie
+41 58 792 81 23

Matthias Marbach
Director, Tax & Legal Services
+41 58 792 44 76

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Daniel Gremaud

Daniel Gremaud
Leader Tax & Legal Services Romandie (Western Switzerland)
Avenue C.-F. -Ramuz 45
1001 Lausanne
Tel. +41 58 792 81 23

Daniel is specialised in corporate tax with a particular emphasis in the reorganisation and setting up of business structures in Switzerland for international clients. He is responsible for the Foreign Based Companies market. He currently heads the worldwide PwC tax team serving many Swiss and foreign based multinationals. He also leads the global tax practice in the French speaking part of Switzerland. As a Swiss Tax Expert, he has accumulated over 30 years of experience in tax consulting for Swiss and foreign groups located in Switzerland. Daniel is a member of the Swiss Tax board, the Swiss oversight board of PwC in Switzerland and also member of the Corporate tax reform III tax force. For several years he was also in charge of the Russia CEE-CIS, US and Brazilian desks within PwC. Daniel speaks French (native), English (fluent) and Italian (native).