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Brazil's president has signed into law a bill offering an amnesty to owners of undeclared offshore assets in return for a one-off tax charge and penalty.

Law No.13254/2016, Implementation of Special Regime for Monetary and Tax Regulation (RERCT), was enacted on 13 January. All individuals or legal entities that were resident or domiciled in Brazil on 31 December 2014 can voluntarily declare previously undisclosed goods or titles of any kind, provided they were legally obtained in the first place. They can also amend inaccurate or incomplete previous disclosures without being prosecuted.

Applicants for the so-called special regime amnesty must provide the Federal Revenue Bureau with a single declaration setting out detailed descriptions of the relevant assets in possession before 31 December 2014 with an indication of their value in Brazilian real (BRL). If assets affected are BRL100,000 or over, the participation of a financial institution is required.

A one-off income tax charge of 15 percent will be levied on the value of the reported assets, together with a penalty of the same amount (so 15 percent income tax + 15 percent fine). The payment will be considered a definitive settlement of the tax debt, and taxpayers who have already paid something towards their tax obligations will not be reimbursed.

The amnesty will close 210 days from the law's enactment by the Federal Revenue Bureau.

The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances.

Published on our website on Jan.26, 2016