The news rules of the special regime to repatriate foreign resource with crime relief

Brazilian President Michel Temer has approved on March 31st, 2017, Law n. 13.428/2017, that amended Law n. 13.254/2016 and established a second phase (or a new phase)of the special regime of Foreign Resources’ Repatriation (RERCT). The deadline for applying to the new phase of the special regime is one-hundred and twenty days (120) days counted from thirty (30) days after the enactment of a regulation on the matter to be yet issued by the Federal Revenue Service. This regulation is set to occur in the following month.

In this new phase, the reference-date for filling the declaration is June 30th, 2016, thus only the assets not previously declared to authorities can be regularized/repatriated at this moment.Just as in the first phase of the program, the income tax will continue to be applied at a rate of fifteen percent (15%), nevertheless the fine charged will be raised from one-hundred percent (100%) to one-hundred and thirty-five percent (135%) on the amount paid as income tax (effective rate of 35.25%).

Additionally, the Project-Law sets that the currency conversion will respect the American dollar quotation on July 30th,2016, which is according to Brazilian Central Bank, BRL3,21 (three Brazilian Reais and twenty-one cents). This results in a substantial increase on the costs of the transaction if compared with last year’s first phase of the program. The new law also maintained the original wording of article 11, which excludes from the program the public and political agents, and its spouses and relatives until second degree.

Another significant change is that the spoils containing undeclared assets and resources kept abroad may also be included in the program, if the succession is opened until the deadline to adhesion. Finally, those who applied to last years’ first phase of the program may alsoadhere to the second phase, being of course charged according to the new law.