Brazil-New Zealand Tax Guide
A practical guide to the tax framework governing transactions, investments, and individuals operating between Brazil and New Zealand.
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Our Brazil Tax Guide covers the complete Brazilian tax system: corporate taxes, indirect taxes, employment taxes, the tax reform transition, and the key obligations for foreign investors.
New Zealand has no general capital gains tax. That cuts both ways for investors moving between Brazil and New Zealand.
Brazil and New Zealand have no bilateral tax treaty in force. Each country taxes cross-border income flows under its own domestic rules, without treaty-reduced withholding rates, permanent establishment safe harbours, or a mutual agreement procedure for resolving transfer pricing disputes. New Zealand’s domestic system has two features that meaningfully shape the relationship: an imputation regime that, like Australia’s franking system, reduces the effective cost of repatriating already-taxed profits to substantial shareholders, and the absence of any general tax on capital gains, which removes the domestic tax base against which a Brazilian exit tax could otherwise be credited.
This guide covers Brazilian withholding income taxes on outbound payments to New Zealand recipients, how those taxes stack on a single transaction, New Zealand’s taxation of Brazil-sourced income (including the foreign tax credit, the CFC rules and the FIF regime for portfolio holdings), transfer pricing, and key structuring considerations. Brazil’s IRRF at 10% on dividends under Law 15,270/2025 is the primary withholding cost on the Brazilian side of a dividend flow.
Having no DTA does not mean being double-taxed, but it does mean paying closer attention.
New Zealand maintains one of the more extensive tax treaty networks in the Asia-Pacific region, with roughly 40 double tax agreements in force. Brazil is a notable gap. The practical consequences are more limited than they might appear, because New Zealand’s unilateral foreign tax credit under subpart LJ of the Income Tax Act 2007 prevents double taxation on the same income in the majority of well-structured arrangements.
Without a DTA, each country applies its domestic rates in full and relief from double taxation depends on unilateral provisions rather than a negotiated allocation of taxing rights. The more significant constraint is the absence of a mutual agreement procedure: if Inland Revenue and the Federal Revenue Department adjust the same transaction in different directions, the resulting double taxation must be resolved through domestic proceedings in each country.
Both Brazil and New Zealand participate in the OECD Common Reporting Standard (CRS) and are signatories to the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters. Inland Revenue and the Federal Revenue Department exchange financial account data on their respective residents annually. The absence of a DTA does not reduce the visibility of cross-border structures to either tax authority.
The main taxes that affect cross-border operations
The following taxes arise in virtually every substantive business relationship between New Zealand and Brazilian entities. Each operates independently; satisfying one obligation does not reduce or eliminate any other.
No single mechanism eliminates double taxation between New Zealand and Brazil. Every cross-border payment stream must be modelled from both sides, applying each country’s domestic rules independently. Because New Zealand’s headline company rate (28%) sits below Brazil’s combined rate (34%), income flows are rarely taxed twice in full — but capital gains are the exception: with no New Zealand tax to credit against, the Brazilian exit tax is not offset at all.
The 34% headline rate is not what most Brazilian companies actually pay
The 34% combined IRPJ/CSLL rate applies under the Actual Profit regime, where tax is calculated on audited net profit. Many Brazilian companies instead use the Deemed Profit regime, which produces substantially lower effective rates and has important implications for New Zealand investors modelling their foreign tax credit position and Pillar Two exposure.
A Brazilian entity on the Deemed Profit regime may carry a low effective tax rate relative to its actual profitability. New Zealand enacted its Pillar Two global minimum tax rules (the income inclusion rule and the undertaxed profits rule), applying to in-scope multinational groups for fiscal years beginning on or after 1 January 2025. New Zealand-headquartered multinationals with Brazilian subsidiaries should assess GloBE exposure where the effective tax rate may fall below the 15% floor despite Brazil’s 34% headline rate.
Brazilian withholding income taxes on payments to New Zealand recipients
Brazil imposes Withholding Income Tax (IRRF) on most categories of income paid to non-resident recipients, including New Zealand entities and individuals. New Zealand is not on Brazil’s list of low-tax jurisdictions, so standard rates apply.
Other Brazilian taxes that apply alongside the IRRF
2026 is the first transitional year of Brazil’s new dual-GST system, introduced by Constitutional Amendment 132/2023 and regulated by Complementary Law 214/2025. Full abolition of PIS and COFINS begins in 2027, with IBS replacing ICMS and ISS through 2033. CBS and IBS are structurally comparable to New Zealand’s GST, though New Zealand applies its 15% GST under a single broad-based rate with far fewer exemptions. See our Brazil tax reform guide for a full overview.
How Brazilian taxes stack up on a single transaction
When a Brazilian entity makes a payment to a New Zealand recipient, multiple Brazilian taxes can apply simultaneously. The examples below use a base contract value of NZD 100,000 and standard non-cumulative rates. IOF is excluded given its variability.
Borne by the New Zealand provider − NZD 15,000
Additional cost borne by Brazilian payer + NZD 1,650
Additional cost borne by Brazilian payer + NZD 7,600
Additional cost borne by Brazilian payer + NZD 5,000
Borne by the New Zealand licensor − NZD 15,000
Additional cost borne by Brazilian payer + NZD 10,000
Withheld by Brazilian subsidiary − NZD 10,000
On NZD 100,000 before FTC NZD 28,000
Creditable under subpart LJ; subject to the limitation − NZD 10,000
Borne by the New Zealand lender − NZD 15,000
On NZD 100,000 before FTC NZD 28,000
Within the FTC limitation − NZD 15,000
Importing physical goods into Brazil
The examples above apply to financial flows and services. Physical goods exported from New Zealand into Brazil face a separate and cumulative customs and indirect tax regime, including Import Tax (II), IPI, PIS/COFINS-Import at goods rates, and ICMS on a grossed-up base. New Zealand has no free trade agreement with Brazil, so the full Mercosur Common External Tariff (TEC) applies. The combined burden typically adds 40-70% or more to the CIF value.
Rate set by NCM code; typically 0-35%. No New Zealand-Brazil FTA; TEC rates apply. + NZD 12,000
Varies by product; 0% for many categories. + NZD 5,600
Goods rate; higher than the 1.65% service rate. + NZD 2,100
Goods rate; higher than the 7.6% service rate. + NZD 9,650
State rate varies 12-25% by state and product. + NZD 28,394
Sea freight only; illustrative freight NZD 5,000. + NZD 1,250
These are simplified illustrations. The actual tax burden depends on the classification of the payment, the applicable foreign tax credit limitation, whether the Brazilian entity is on the Actual Profit or Deemed Profit regime, IOF rates at the time of currency conversion, and the impact of Brazil’s indirect taxes reform during the transition. These figures illustrate the stacking effect and are not a substitute for transaction-specific advice.
New Zealand taxation of Brazil-sourced income
New Zealand taxes its residents on worldwide income. Brazil-sourced income received by New Zealand residents is subject to New Zealand income tax, with relief available through the unilateral foreign tax credit under subpart LJ of the Income Tax Act 2007. Three mechanisms are particularly significant: the foreign tax credit, the CFC rules, and the absence of a general tax on capital gains.
New Zealand residents who pay foreign income tax on foreign-sourced income may claim a credit under subpart LJ, limited to the New Zealand tax on that income, calculated separately by category. Excess credits are lost and cannot be carried forward or back.
Under subpart EX of the Income Tax Act 2007, a Brazilian company is a CFC if five or fewer New Zealand residents control more than 50%, or a single resident controls 40% or more. The rules target passive “attributable” income; active business income generally passes the active business exemption for 10%+ interest holders.
Unlike Brazil and Australia, New Zealand does not impose a general tax on capital gains. A New Zealand seller of shares in a Brazilian company generally has no New Zealand tax on the gain, absent a share-dealing business.
Because New Zealand does not tax the gain, a New Zealand investor has no domestic tax liability against which to credit the Brazilian IRRF withheld on disposal (15% up to BRL 5m, rising to 22.5% above BRL 30m). This is not a planning failure — it is simply how the New Zealand system treats capital account gains — but it does mean the full Brazilian exit tax is generally a real, uncredited cost that should be priced into the investment case from the outset.
The FIF regime and portfolio holdings under 10%
New Zealand residents holding less than 10% of a Brazilian company generally fall under the Foreign Investment Fund (FIF) rules (also in subpart EX of the Income Tax Act 2007) rather than the CFC rules. Individuals and eligible trustees are exempt if the total cost of all attributing interests is NZD 50,000 or less throughout the income year; above that threshold, FIF income is typically calculated under the fair dividend rate method — a deemed 5% return on the opening market value — rather than by reference to actual dividends or realised gains. This can tax a New Zealand investor on a deemed return even where the Brazilian holding has made a loss or paid no dividend. Unlike certain ASX-listed Australian shares, there is no equivalent carve-out for Brazilian holdings.
Two OECD-aligned systems, plus New Zealand’s own restricted pricing overlay
Both Brazil and New Zealand apply transfer pricing rules aligned with the OECD arm’s-length standard. The absence of a DTA means there is no mutual agreement procedure to resolve disputes arising from transfer pricing adjustments in either country.
Brazil’s new transfer pricing rules
Law 14,596/2023 and IN RFB 2,161/2023 replaced Brazil’s former fixed-margin transfer pricing system with rules fully aligned with the OECD Transfer Pricing Guidelines, effective from 2024.
New Zealand’s transfer pricing rules
Under sections GC 6 to GC 14 of the Income Tax Act 2007, Inland Revenue requires contemporaneous documentation for significant related-party dealings. Updated 2026 IR guidance takes a stricter compliance stance, warning that inadequate documentation will “most likely” attract shortfall penalties where a transfer pricing adjustment is made.
New Zealand’s thin capitalisation rules apply a safe-harbour debt percentage of 60% for inbound (foreign-controlled) New Zealand taxpayers, relaxed where the New Zealand entity’s debt percentage does not exceed 110% of the worldwide group’s debt percentage. Related-party loans are additionally subject to New Zealand’s restricted transfer pricing rules (sections GC 15-19) once aggregate cross-border associated-party debt exceeds NZD 10 million: these override ordinary arm’s-length pricing and generally require the loan to be priced as if it were senior, unsecured debt on prescribed standard terms. Brazil separately limits related-party interest deductions under Law 12,249/2010 where debt exceeds twice the creditor-attributable net equity. Intercompany loans between the two countries must satisfy both regimes independently.
Structuring considerations for New Zealand investors in Brazil
In the absence of a DTA, the holding structure chosen for a New Zealand investment in Brazil has a direct and material impact on the overall tax burden, and on how much of the Brazilian exit tax ends up genuinely uncredited.
Holding structure
Key takeaways for New Zealand investors
Need advice on your Brazil-New Zealand tax structure?
The interaction of Brazilian and New Zealand tax rules in the absence of a DTA requires careful, transaction-specific analysis. Contact us to discuss your situation.
More bilateral tax guides
All Guides →This guide is a general overview only and does not constitute legal or tax advice. Tax laws in both countries change frequently. The specific tax treatment of any transaction depends on the facts, the structure adopted and the current state of the law in each jurisdiction. Obtain specific legal and tax advice before structuring any cross-border transaction.
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