Guide to m&a tax 2021

c. Alignment with the BEPS initiative
Normative Instruction nº 1,846/2018, issued by the Brazilian Revenue Service, regulated the Mutual Agreement Procedure (“MAP”) under international agreements and 
conventions to avoid double taxation, in accordance with Action 14 of the Base Erosion and Profit Shifting – BEPS initiative proposed by the Organisation for Economic 
Cooperation and Development - OECD.
Further, Normative Instruction nº 1,870/2019 introduced some changes to Brazilian Transfer Pricing rules, in line with BEPS Action 10.
d. Tax measures to cope with the COVID-19 pandemic crisis
The Federal ministries of Health and Economy have quickly established a series of measures to cope with the COVID-19 crisis. The most important measures were 
established by Provisional Measures proposed by the Federal Government which gave legal basis to normatives provided by other organs to deal with the economic 
and social crisis. The measures are centered in public expenditures in key areas, such as health and education; financial aid to vulnerable populations and to small 
businesses; job maintenance and facilitation of credit. 
3. SHARE ACQUISITIONS
a. General Comments
A share acquisition implies in the acquisition of participation in a company, with the corresponding assets and liabilities.
The purchase of shares can result in capital gains taxation in Brazil, which is realised by the seller if there is a positive difference between the sales price and the 
sellers acquisition cost (or basis). If the seller is a legal entity, then the capital gains arising from a share sale are subject to the Brazilian corporate income tax 
at a combined nominal rate of 34%. However, if the gain is realised by a non-resident seller or by a resident individual seller, it is subject to income tax at a 
progressive rate of 15% up to 22.5%. In the case of non-resident sellers, the tax must be withheld by the Brazilian acquiror or by Brazilian acquiror or by a 
local representative of a non-resident acquiror, at the same progressive rates.
In addition, it is important to mention that article 95 of Normative Instruction nº 1,585/2015 provides that a capital gain realised by a non-resident 
on the sale of quotas of a private equity fund is subject to WHT at the rate of 0%.
TAXAND GLOBAL GUIDE TO M&A TAX 2021
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