On 8 August 2014, guidance (Divergence Solution 8/2014) was published in Brazil's Official Gazette. The guidance clarifies the Brazilian tax authorities position on the offsetting of foreign tax withheld for cross border service payments.
When determining the tax base in Brazil, taxpayers can use the actual taxable income or presumed profit tax method. In the past, the Brazilian tax authorities issued conflicting formal consultations on whether or not taxpayers using the presumed profit met…