Companies headquartered or with branches in Brazil must be aware of 3 tax compliance points in order to operate regularly, and to be prepared for corporate events such as M&As or financing:
1. Tax Clearance Certificates: There are at least 3 tax clearance certificates that a company must be complied with: Federal, State and the Municipality at which the company operates. Tax certificates from all such three levels of tax authorities are needed in order to contract with the public sector, and in a growing number of companies, particularly the global organizations.
2. Tax Clearance Certificates of Senior Officers and Controlling Shareholders: It is important to have tax clearances issued in the name of the company’s senior management and controlling shareholders, because their status before the Tax Authorities is important, given that they can be responsible for tax obligations in some cases.
3. Monitor Relevant Tax Cases: Tax discussions before the administrative or judicial courts are common in Brazil and can last for several years. It is important to monitor the ones that may have criminal consequences, and/or impose a material cash flow impact on the business and/or may require the deposit of money or key assets as guarantee (which may be held for years).
The 3 tax compliance points above should be of strategic help to foreigners in their investments in Brazilian companies.