After five months of discussions, Brazil and the United Kingdom signed today (29) an agreement to avoid double taxation on income and to prevent tax evasion and avoidance. According to the Federal Revenue Service, the measure will increase legal security in transactions between the two countries and will result in the expansion of bilateral trade and investment flows.
According to the special secretary of the Federal Revenue, Julio Cesar Vieira Gomes, the expansion of the country’s tax treaty network helps in the process of Brazil’s accession to the Organization for Economic Cooperation and Development (OECD). The United Kingdom is the 26th OECD member country with which Brazil signs this type of agreement.
According to the Tax Authorities, the agreement is in line with the OECD Model Convention and with the group’s project to avoid erosion of the tax base and the transfer of profits. 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, explained the Revenue Secretary, intends to correct these distortions, reducing the Brazil cost. He said that the signature complies with the demand of entities representing the Brazilian private sector. “I hope that the signing of this convention will play an important role in increasing trade and investment, the attractiveness, competitiveness of Brazilian products, legal certainty and long-term stability,” he said.
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In addition to the special secretary of Revenue, the signing ceremony of the agreement was attended by the interim ambassador of the United Kingdom in Brazil, Melanie Hopkins; the executive secretary of the Ministry of Economy, Marcelo Guaranys; and representatives of the Ministry of Foreign Affairs and the Special Secretariat for Foreign Trade and International Affairs of the Ministry of Economy.
“This treaty will have the potential to substantially increase trade between our countries, as well as attract investment and strengthen trade relations between Brazil and the United Kingdom,” said Ambassador Melanie Hopkins. “Brazil is the largest country with which we have a close bilateral economic relationship and with which we still do not have a double taxation agreement in force. This is a priority for the UK and we are here to address it,” she added.
Guaranys classified the signing of the agreement as a historic moment and recalled some of the main moments of its preparation, which began in June. According to the executive secretary, the speed in building the agreement demonstrates the effort of all the bodies involved in the work.
According to the Central Bank, Brazilian investments in the United Kingdom totaled US$ 5.2 billion, and British investments in Brazil totaled US$ 25.2 billion in 2020. In turn, the trade flow (sum of exports and imports) reached US$ 5.6 billion in 2021, according to the Foreign Trade Secretariat of the Ministry of Economy.
