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Brazil and the United States Sign an Agreement for the Exchange of Federal Tax-Related Information

On March 20, 2007, the governments of Brazil and the United States signed the US-Brazilian Tax Information Exchange Agreement (“TIEA”) to combat tax evasion and other tax related crimes as well as to protect their tax basis in cross-border transactions involving both jurisdictions.

Under this agreement, both countries’ tax authorities shall ensure that they retain duly regulated mechanisms to furtherance the exchange of such tax related information. In this regard, pursuant to Article 1 of the TIEA, the content of information to be exchanged between the two countries concerns data in respect of the investigation or prosecution of criminal tax matters, as well as the determination, assessment, enforcement or collection of federal taxes in Brazil and in the United States.

Article 5 thereof also provides that the Brazilian Federal Revenue Service(“SRF”) may request information from US tax authorities only when unable to obtain the requested information by other means, except where recourse to such means would give rise to a disproportionate burden. If this disproportional burden is not evidenced, Article 7 of the TIEA states that US tax authorities may refuse the information requested by SRF.

In general, in the circumstance that US tax authorities do not have in their possession the information requested by SRF, they shall be required to obtain and provide information even if such information were of interest solely to the SRF, except if the SRF is unable to obtain such information in similar circumstances under its own laws or if it is determined that disclosure of such information is contrary to public policy.

In accordance with Article 3 of the TIEA, the exchange of information does not apply to situations in which the collection of taxes concerns an action or proceeding which is barred by the requesting party’s statute of limitations. In addition to the exchange of information, Article 6 provides that the SRF may request that US tax authorities allow SRF officials to enter into US territory to interview individuals and examine records with the prior written consent of the individuals concerned. In order for the TIEA to enter into force in Brazil, it requires approval by the National Congress, followed by ratification by the president of the Federative Republic of Brazil and publication of a Presidential Decree in the Federal Official Gazette.

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