Brazil Publishes Provisional Measure on Changes to Interest on Equity Capital and Other Changes

On 30 September 2015, Brazil published Provisional Measure (PM) 694/2015 in the Official Gazette. PM 694 includes the following changes:

• Interest on equity capital (JCP) paid to partners or shareholders may be deducted at the lower of Brazil's long-term interest rate (TLJP currently 7%) on a pro-rata basis per day or 5% per year;
• Withholding tax rate on JCP is increased from 15% to 18%;
• R&D incentives under Law 11,196/2005 are suspended, including the additional 60% to 100% deduction for…