Post by account_disabled on Mar 14, 2024 3:39:29 GMT
Subsystems however it is appropriate to nominally distinguish them. Therefore if the new ones are CFC-PF rules those already in force are renamed CFC-PJ rules at least for this article.
An allowance is made for the terminology because Law No. itself made a mistake in calling the CFC-PJ rules “universal taxation of legal entities”. The problem is in giving the name continent to something that is content. Taxation on a universal basis TBU worldwide basis taxation occurs when a tax resident is taxed in the jurisdiction of residence in relation to income earned abroad with its diametrical opposite being taxation on a territorial basis territorial basis taxation .
Naturally CFC rules generate this effect when income originating abroad — indirectly earned by the tax resident and directly earned by the non-tax resident legal entity — is taxed in the CG Leads jurisdiction of residence of the tax resident regardless of realization. It turns out that there is also a TBU when the tax resident earns income directly abroad for example their own income resulting from financial investments abroad also achieved by Law No. articles and .
This terminological discussion however is not a mere tax technicality as it reveals a significant distinction between the CFC-PF rules and the CFC-PJ rules. Pursuant to article of Law No. the new taxation regime is only applicable when the entity abroad is located in a favored taxation jurisdiction or is subject to a privileged tax regime or have your own active income of less than of your total income. Each of these categories would deserve its own article to be properly discussed. But for present purposes it suffices to conclude that the CFC-PF rules mostly target passive income abroad that is that made up of royalties interest dividends etc. and not that resulting from the sale of goods and services provision.
Therefore the new rules differ from the CFC-PJ rules in that they achieve both active income and passive income abroad without percentage qualifications. At the same time the academic argument that it is inappropriate to use the term “CFC rules” or similar ones for this type of taxation subsystem that reaches active income is even less applicable in relation to the CFC-PF rules.
Moving forward the CFC-PF rules also bring innovation regarding the concept of control for the purposes of contemporary inclusion of income from abroad. According to article control is verified when in relation to a foreign legal entity the individual tax resident in Brazil: has preponderance in corporate deliberations or the power to elect or remove the majority of its administrators; or holds more than of the share capital the rights to receive profits or the rights to receive assets in the event of liquidation.
An allowance is made for the terminology because Law No. itself made a mistake in calling the CFC-PJ rules “universal taxation of legal entities”. The problem is in giving the name continent to something that is content. Taxation on a universal basis TBU worldwide basis taxation occurs when a tax resident is taxed in the jurisdiction of residence in relation to income earned abroad with its diametrical opposite being taxation on a territorial basis territorial basis taxation .
Naturally CFC rules generate this effect when income originating abroad — indirectly earned by the tax resident and directly earned by the non-tax resident legal entity — is taxed in the CG Leads jurisdiction of residence of the tax resident regardless of realization. It turns out that there is also a TBU when the tax resident earns income directly abroad for example their own income resulting from financial investments abroad also achieved by Law No. articles and .
This terminological discussion however is not a mere tax technicality as it reveals a significant distinction between the CFC-PF rules and the CFC-PJ rules. Pursuant to article of Law No. the new taxation regime is only applicable when the entity abroad is located in a favored taxation jurisdiction or is subject to a privileged tax regime or have your own active income of less than of your total income. Each of these categories would deserve its own article to be properly discussed. But for present purposes it suffices to conclude that the CFC-PF rules mostly target passive income abroad that is that made up of royalties interest dividends etc. and not that resulting from the sale of goods and services provision.
Therefore the new rules differ from the CFC-PJ rules in that they achieve both active income and passive income abroad without percentage qualifications. At the same time the academic argument that it is inappropriate to use the term “CFC rules” or similar ones for this type of taxation subsystem that reaches active income is even less applicable in relation to the CFC-PF rules.
Moving forward the CFC-PF rules also bring innovation regarding the concept of control for the purposes of contemporary inclusion of income from abroad. According to article control is verified when in relation to a foreign legal entity the individual tax resident in Brazil: has preponderance in corporate deliberations or the power to elect or remove the majority of its administrators; or holds more than of the share capital the rights to receive profits or the rights to receive assets in the event of liquidation.