Brazil and South Africa: double taxation agreement explained
A practical guide for South African businesses, investors and advisers dealing with Brazil. What the treaty covers, what it does not, and what Brazilian taxes still apply.
Contact Us
Brazil and South Africa have a double taxation agreement in force, but it does not eliminate all Brazilian taxes.
The Brazil-South Africa treaty allocates taxing rights on income such as dividends, interest, royalties and capital gains. It may reduce the Brazilian withholding rate below the domestic rate of 15% or 25% for qualifying recipients. However, CIDE, ISS and IOF are generally outside the treaty’s scope and continue to apply under Brazilian domestic law.
South African businesses dealing with Brazil often encounter a multi-layered tax stack even where the treaty applies. Classification of the payment, whether it is a service fee, royalty or dividend, determines which treaty article applies and which Brazilian domestic taxes remain in place. Beneficial ownership and substance requirements must also be satisfied to access treaty benefits.
What the Brazil-South Africa treaty covers
The treaty sets reduced withholding rates and allocates taxing rights between South Africa and Brazil. The main issues for South African businesses dealing with Brazil are set out below.
Treaty analysis is fact-specific. The applicable rate depends on the nature of the income, the relevant treaty article, the transaction structure and the residence and substance of the recipient. Confirm before pricing.
What South African businesses need to know
Domestic vs treaty rates at a glance
Treaty may reduce the IRRF component. Confirm the applicable article and rate before pricing.
Treaty may reduce IRRF. CIDE and IOF apply regardless of the treaty position and are not reduced by it.
Not yet familiar with the Brazilian tax system? Our practical guide covers every major tax that may apply to cross-border transactions with Brazil, with worked examples and full calculations.
Read the GuideQuestions about the Brazil-South Africa treaty? We can help.
Our team advises on Brazilian tax and treaty issues for foreign businesses and investors. Contact us before finalising pricing or structure.
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.
Brazilian lawyers for foreign companies, investors and law firms.