Among these, the obligation to disclose beneficial ownership stands out. This obligation applies to both Brazilian and foreign companies, and certain documents must be submitted for this purpose.
This means that the Federal Revenue Service must be informed of the individuals who directly or indirectly control or influence the legal entity in question. Normative Instruction 1.634 further defines "influence" as a direct or indirect stake of more than 25% in the company or the direct or indirect exercise of preponderance in corporate decisions and the election of the majority of directors.
Among other exceptions to the rule, publicly traded Brazilian companies and foreign companies are exempt from presenting such information, provided they are located outside tax havens.
This information must be provided from January 2017 until the end of 2018. Failure to comply with this obligation will result in the suspension of the CNPJ and the prohibition of transactions with banking establishments, except in some specific cases.
In practice, Brazilian companies with foreign ownership already have to provide this information to banks when opening their checking accounts. Thus, the biggest change is government control of this information, which is consistent with the global trend toward eliminating corporate anonymity.
In this regard, Normative Instruction 1.634 further determines that entities with a Legal Entity Identifier (LEI) must report this registration number to the Federal Revenue Service. The LEI is an international registry of entities that transact financial transactions and assigns a unique identification number to each entity.
