Brazil ratifies treaty with Singapore 28 jun 2023

Brazil ratifies treaty with Singapore

On June 30, 2022, Brazil published Decree No. 11.109/2022, enacting the treaty for the

avoidance of double taxation and prevention of tax evasion (“DTA”) between Brazil and Singapore, signed on May 7, 2018.

Currently, Brazil has 35 DTAs in effect and the increase in such number is seen as a measure to encourage foreign investments, promote the development of economic and commercial
relations, foster tax cooperation and curb abusive tax planning.

Under the Preamble and Article 30 of Brazil Decree No. 11.109/2022, Brazil-Singapore DTA entered into force on December 1, 2021 (at the international level), and will only become effective in Brazil on January 1, 2023. However, there is a discussion of whether Brazil- Singapore DTA should be considered effective as of June 30, 2022 (when the Decree was published) or even as of January 1, 2022 (the first day of January following the date uponwhich the DTA has entered into force), as we explain in our comments to Article 30.

Please find below some of the key provisions of Brazil-Singapore DTA.

DTA provisions and
Brazil-Singapore DTA
Persons covered (Article 1) Applies only to persons resident in the Contracting States.

Limits the use of transparent entities to unduly obtain
treaty benefits.

Residency (Article 4) The person who is a tax resident, according to the
domestic legislation of the Contracting State. Effective
place of management as tie-breaker rule.
Dividends – maximum
withholding tax (WHT) rate
(Article 10)Currently, dividends are tax
free in Brazil under domestic
a) 10%, if conditions are met, including if the
beneficial owner is a company (other than a
partnership) that directly holds at least 25% of the
capital of the company paying the dividends,
within a period of one year.b) 15% in all other cases.
Interest – maximum WHT
rate (Article 11)
a) 10%, if the beneficial owner is a bank and the loan
was granted for at least five years to finance the
purchase of equipment or investment projects; orb) 15% in all other cases.
Treats interest on net equity (INE) as an interest payment
for treaty purposes (item 4, a of the Protocol to Brazil-
Singapore DTA).

Most Favored Nation clause: if after signing the treaty,
Brazil agrees with another country (excluding any State in

Latin America) on rates that are lower (including
exemptions) than the ones provided for interest, then such
rates shall be automatically extended to Brazil-Singapore
DTA (item 4, d of the Protocol to Brazil-Singapore DTA).

Royalties – maximum WHT
rate (Article 12)
a) 15% for use of trademark.

b) 10% in all other cases, including technical
assistance (item 5 of the Protocol to Brazil-
Singapore DTA).

Technical services –
maximum WHT rate (Article
10% on the payment of compensation for technical
services.Under Brazil-Singapore DTA, “compensation for technical
services” means any payment as consideration for any
service of a managerial, technical or consulting nature,
unless payment is made:

a) to an employee of the person making the

b) by virtue of teaching at an educational institution
or teaching provided by an educational institution;

c) by an individual for services for the personal use of
an individual.

Capital gains (Article 14) Under Brazilian domestic
legislation, non-resident capital gains are generally
subject to WHT at progressive rates from 15%
to 22.5% (except for beneficiaries located in low-
tax jurisdiction, which is subject to the fixed rate of
The source State may tax the capital gain arising from the
sale of property (with no limitation).
Elimination of double
taxation (Article 24)
General rule: Entitles residents in both Contracting States
to a deduction of tax credits for taxes paid in the other
Contracting State.
Entitlement to treaty
benefits (Article 28)
A resident of a Contracting State shall not be entitled to a
benefit that would otherwise be accorded by the DTA
(other than a benefit under Article 9 or Article 26) unless
such resident is a “qualified person”, as defined in
paragraph 2 of Article 28 at the time that the benefit
would be accorded.
Entry into Force (Article 30) Each of the Contracting States shall notify the other
through diplomatic channels the completion of the
procedures required by its law for the bringing into force of
the DTA.The DTA shall enter into force on the date of the reception
of the second of these notifications and its provisions shall have effect in Brazil:

i. in respect of taxes withheld at source, on income
paid, remitted or credited on or after the first day
of January next following the date upon which the
DTA enters into force; and

ii. in respect of other taxes, on income arising in the
taxable years beginning on or after the first day of
January next following the date upon which the DTA enters into force;

Under the Brazilian law, Brazil-Singapore DTA entered into
force only at the date Decree No. 11.109/2022 was published, Therefore, the referred DTA shall be effective in Brazil only on the first day of January following the date upon which the DTA entered into force (i.e., January 1,

Our team at Campos Mello Advogados, in cooperation with DLA Piper, Alex Jorge, Humberto Marini, Renato Lopes, Victor Kampel, Marcelo Siqueira, Paulo Takafuji and Laura Kurth can assist with you in case you have any questions.