Treaty prevents that professionals from the two countries pay income tax twice

The House Floor approved on Tuesday (5), the Bill on a Legislative Decree 2528/06, which contains the agreement between Brazil and Peru to avoid bi-taxation and prevent tax evasion in the collection of Income Tax. That convention, signed in 2006, benefits, for instance, self-employed professionals, employees, students, and sportspeople. That matter needs to be voted now by the Senate.

According to the agreement, if a Brazilian professional earns income in Peru, he/she can discount, when there is the determination of the tax to be paid in Brazil, the tax which had been paid in that country. Bi-taxation is thus avoided.

The text provides for a more intense inspection in the payment of taxes, by means of an integrated work.

Evasion
According to the Ministry of Foreign Relations, the agreement is necessary for the fight against tax evasion in a context of “growing morbidity of capitals, people and entrepreneurial activities”. The ministry stresses that the convention, because of the diversity of the involved areas, “reflect in a balanced way the progressive level of commercial trade, economic integration and flow of people between the two countries”.

The text also establishes rules on the profits of companies with Brazilian and Peruvian partners and transportation between the two countries.

Report - Eduardo Piovesan
Editing - João Pitella Junior
Translation - Positive Idiomas Ltda