FEDERAL REVENUE FURTHER REGULATES TAXATION OVER FINANCIAL AND CAPITAL MARKETS

Normative Ruling 1,236 (NR 1,236), published in the Official Gazette of 30 January 2012 and in force as of that date, introduced amendments to Normative Ruling 1,022 (NR 1,022), which regulates the levy of income tax over income and gains earned within the financial and capital markets.

The main innovations brought by NR 1,236 are as follows:

–	modification of the methodology for classification of a fund as long or short–term, and determination that the portfolios held in real estate investment funds shall be excluded from the consideration of whether or not the fund is medium-term;
–	determination that the re-classification of an investment fund's term (i.e. from short- to long-term), resulting from alterations to its portfolio, may only be carried out once a year;
–	establishment of new requirements for the enjoyment of income tax exemption granted to investment funds;
–	amendments to the regulations pertaining to the taxation of activities carried out by Infrastructure Private Equity Funds, and introduction of regulations regarding the taxation of activities carried out by Research, Development and Innovation Private Equity Funds;
–	exclusion of the application of withholding income tax upon earnings resulting from investments held by Real Estate Funds in certain specified bonds related to the agri-business sector;
–	introduction of regulations pertaining to the taxation of Investment Funds whose portfolios are composed of debentures;
–	clarification that the transformation of an investment club into an investment fund of the same nature does not imply any alteration of its applicable tax regime;
–	determination that costs and expenses incurred in all transactions carried out in 1 day within the stock exchange market can be attributed to each transaction proportionally to the financial values involved;
–	determination that capital reduction transactions that result in a monetary restitution of the investment made in legal entities to the shareholders are considered as a deduction of the acquisition cost of the shares for transactions undertaken within the cash spot market (mercado à vista); and
–	for shares acquired up to 31 December 1999 whose cost cannot be proven for the purpose of determination of the income tax taxable base, determination that the cost may be determined by: –     the average price of the share, pursuant to negotiations carried out with the share within the stock exchange market in December 1999; or –     in case no negotiations carried out within that month, in the closest previous month in which the share was negotiated.