Brazil signs tax treaty with UAE potentially ending blacklisting, approves South Africa pact

By Francisco Lisboa Moreira, Bichara Advogados, São Paulo

Brazil on Monday signed a new double tax treaty with the United Arab Emirates. The text has not yet been released.

This represents a further advancement of Brazil’s international tax policy under President Michel Temer, following a new treaty with Argentina, signed in 2017, and treaties with Switzerland and Singapore, signed earlier this year.

The UAE is currently blacklisted in Brazil as a low-tax jurisdiction under Normative Instruction 1.037/2010.

Therefore, we expect a change in the UAE’s status soon. Most likely, Brazil will instead identify UAE regimes that will be treated as a privileged tax regime.

Brazil also published yesterday a decree accepting a protocol to the double tax treaty between Brazil and South Africa, which was signed in 2015.

The protocol amends article 26 of the treaty, which deals with information exchange procedures between both countries. 

Information to be exchanged will be used for federal tax purposes, in the case of Brazil, and national taxes, in the case of South Africa. This represents an increase in the scope of the treaty, as other federal taxes may be charged from information obtained, such as PIS and COFINS, or even social security taxes.

The information received pursuant to the treaty must be treated as fully confidential and be used for the sole purpose of tax assessment procedures, following general procedures established by the OECD and United Nations model conventions.