UK and Brazil take major step toward smoother, stronger trade

UK and Brazil take major step toward smoother, stronger trade

Reading time: 3 mins approx.

A new and significant milestone has been reached in the United Kingdom’s economic relationship with Brazil.

The UK government this week announced the signing of a Double Taxation Agreement (DTA) with Brazil, reducing costly barriers to trade, investment and cross-border work, following five months of active negotiations, and exploratory dialogues running since 2017.

Once it comes into force, taxes on income and corporate profits will no longer be applied twice, ending an expensive burden and a cause for uncertainty, and measures to curb tax evasion will benefit from improved information exchange.

This new agreement has been sought enthusiastically by businesses, eager to cut through the web of administrative and economic red tape caused by the two countries’ differing tax and legal systems – with Brazil being one of the UK’s last remaining major trading partners still affected by the absence of a formal agreement.

Jonathan Dunn, Head of International Policy and UK Government Relations at Anglo American, a Canning House Corporate Member, said: "It’s been a long and challenging road but, once ratification is secured, it will be fantastic news for those interested in promoting British investment in Brazil and Brazilian investment in the UK." Jonathan worked on the agreement during his time at the British Embassy Brasilia.

Melanie Hopkins, who signed the DTA as the UK’s Deputy Head of Mission in Brazil, celebrated what she called “one of the most important achievements of the trade relationship between Britain and Brazil in recent years.”

It is hoped too that the DTA represents another key step towards a trade deal between the UK and Brazil. Marco Longhi MP, the PM’s Trade Envoy to Brazil, said:

“At US$1.9 trillion [GDP] Brazil is the 9th largest [economy] in the world but trading with the country has been notoriously difficult and unattractive. The removal of this double-tax trade barrier will mean many more jobs and wealth creation for both the UK and Brazil, and it is a major milestone towards any future trade deals.”

Thanking the British Embassy Brasilia, Marcelo Guaranys, Executive Secretary at Brazil’s Ministry of Economy, hailed the speed of the DTA negotiations, calling the UK a “lifelong partner.”

Julio Cesar Vieira Gomes, Special Secretary of the Federal Reserve, added his optimism “that the signing of this convention will play an important role in increasing trade and investment, the attractiveness and competitiveness of Brazilian products, legal security and long-term stability.”

Canning House warmly welcomes the DTA and looks forward to the continued positive development of UK-Brazil economic and business ties.

Interested to learn more about Latin American trade and investment? Join us in January as we examine a potential resurgence for the once much-maligned Mercosur trade bloc, with the Paddy Ashdown Forum and GPS. Learn more here.