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The Federal Revenue Office has issued Private Letter Ruling 185/2018, which analyzes the tax compliance obligations that taxpayers must comply with in order to offset the withholding income tax levied on service fees, profits, capital gains and other income earned abroad against the corporate income tax levied in Brazil.

According to the tax authorities, the Brazilian taxpayer must prove the withholding income tax credit’s existence with the original payment form or a report issued by the foreign country’s IRS, as long as these documents are certified by the Consulate of the Brazilian Embassy in the source country.

However, these documents do not require certification by the Brazilian Consulate if: (i) the withholding income tax is on dividends paid by a company invested in abroad and the tax is paid through a specific form foreseen in the foreign country’s legislation; or (ii) the withholding income tax is paid in a signatory country of the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents, in which case the payment document will require an apostille.

Finally, according to the tax authorities, the waiver of certification by the Brazilian Consulate is not provided for in the Agreement on Jurisdictional Cooperation and Assistance in Civil, Commercial, Labor and Administrative Matters, signed between Mercosur’s signatory countries including Brazil, Chile and Bolivia.