The Administrative Tax Appeals Council (Conselho Administrativo de Recursos Fiscais, CARF) recently gave its decision in the case of Brasil Warrant Administracao de Bens e Empresas Ltda v. National Treasury (Administrative Proceedings No. 16327.000572/2005-69). The CARF ruled that the taxpayer's partial spin-off did not trigger the taxation of the profits accrued by its foreign subsidiary located in the Cayman Islands.
Prior to 2001, Brazilian CFC rules determined that profits of foreign…