The 1st Panel of the Superior Chamber of the Administrative Council of Tax Appeals rejected two proposed Summaries this month.
One of them dealt with the taxation by the parent company, in Brazil, of profits originating from a subsidiary or affiliate abroad, even with the existence of an international treaty to prevent double taxation, while the other dealt with the simultaneous collection of individual and ex officio fines.
Regarding the taxation by the Brazilian parent company of profits earned by its foreign subsidiary or affiliate, although there is a prohibitive international treaty, which is the subject of proposed Precedent No. 26, the text stated that international conventions entered into by Brazil would not prevent the taxation of a parent company headquartered in Brazil on profits earned by foreign controlled companies. This is beneficial for taxpayers, who will be able to apply Article 98 of the Brazilian Tax Code and the STJ’s understanding on the matter.
On the other hand, the proposed Summary nº 24, which dealt with the isolated and ex officio fine, had as its purpose the simultaneous collection of an isolated fine with an ex officio fine, in cases of non-payment of tax, thus doubling the penalty imposed on the taxpayer.
