Brazil and Uruguay have included provisions to tackle base erosion and profit shifting in a new double tax agreement, signed on June 7, 2019.
The Brazilian Government said the conclusion of the agreement reflects the country’s efforts to expand and modernize its network of tax agreements. It has now signed 37 double tax pacts, of which 33 are in force.
The convention sets out the two countries’ respective taxing rights, to avoid the same income from being taxed in each country, to provide certainty for businesses.
In addition, the new agreement incorporates the minimum standards developed by the OECD on BEPS. Measures included in the Convention address hybrid mismatch arrangements, treaty abuse, and strategies to avoid the creation of a “permanent establishment.” The Convention also enhances dispute resolution mechanisms, and includes specific provisions that are intended to combat tax evasion and prevent abuse of the agreement.
The Government said the new agreement will support Brazilian companies to look to expand into and trade with Uruguay.