Reopening of the Special Regime of Exchange and Tax Adjustment (“RERCT”)
31 July 2017 is the deadline for joining the RERCT. The program (reopened by Law No 13,428/2017 and regulated by Normative Instruction No 1,704/2017) allows the regularization of assets held abroad, either not declared or incorrectly declared, by Brazilian residents.
Up to such date, the declaration of resources, assets or rights, of legal origin, remitted, kept abroad or already repatriated, may be regularized by residents in Brazil.
The declaration, that guarantees amnesty in relation to foreign exchange and tax crimes (such as foreign currency drain and dodging), shall concern assets existing up to 30 June 2016, and must be submitted jointly with the payment of applicable taxes (at a rate of 15%) plus a fine (of 135% of the tax value), totaling 35.25% over the declared assets value.
The regularization is necessary to avoid tax assessments (with interest and higher fines) and criminal prosecutions, especially in view of the beginning of the international exchange of information between Brazilian and other 99 countries’ tax authorities under the Convention on Mutual Administrative Assistance in Tax Matters. Information on financial assets held by the citizens of the countries that adhered to the convention will be made available automatically, by each jurisdiction where the assets are located to the country of tax residence, according to the Common Reporting Standard, which is the most comprehensive tool so far created to promote fiscal transparency and avoid evasion worldwide.
A careful case by case basis analysis is recommended to evaluate the goods to be declared, and in what way, so that the amnesty offered by the program is effective.