Emerging Markets Rates and Currencies Handbook

Estrangeira no País) under specific regulations of the Central bank. To this date, Citi only offer CCMEs to insurance and reinsurance companies. Non-Resident Accounts According to the Resolution CMN 4,373, of September 29, 2014, foreign investors can access the onshore derivative market through an investment account in the local stock exchange, fixed income and local futures exchange. Foreign investors must have a Brazilian custodian, legal and tax representatives. Investors established in tax haven jurisdictions are taxed as local investors. If established in a non-tax haven jurisdiction, investors are taxed as follows: Swap and future (OTC): 10% Exchange-traded derivatives: Exempt Offshore foreign currency account According to Bacen Regulation, Brazilian exporters may maintain 100% of the export payments abroad. Brazilian companies with offshore accounts must provide the following reports to regulators: Derex: Provided once a year to the Tax Authority, it describes the total exports received in the offshore account and what type of payments were done with these receivables (monthly). Applicable to exporters, only. DCBE - Declaração de Capitais brasileiros no Exterior: As a general rule, must be provided once a year for the Bacen. It must be reported if total assets held offshore is equal to or higher than USD 1 million at the year-end (Dec 31). Only the amount at that day. Clients with assets equal or above USD 100 million, must provide quarterly reports. For further information: https: //www.b cb.gov.br/estabilidadefinanceira/cbe Companies in specific industries — insurance, reinsurance, energy, tourism, oil exploration, etc. — can operate local foreign currency accounts (CCME – Conta em Moeda Estrangeira no País) under specific regulations of the Bacen. To this date, Citi only offer CCMEs to insurance and reinsurance companies. Non-Resident Accounts According to the Resolution CMN 4,373, of September 29, 2014, foreign investors can access the onshore derivative market through an investment account in the local stock exchange, fixed income and local futures exchange. Foreign investors must have a Brazilian custodian, legal and tax representatives. Investors established in tax haven jurisdictions are taxed as local investors. If established in a non-tax haven jurisdiction, investors are taxed as follows: Swap and future (OTC): 10% Exchange-traded derivatives: Exempt Deal Management Rollover: Possible through NDFs, Options or swaps. All of them are net settled. Unwinding: Possible through NDFs, Options or swaps. All of them are net settled. Early Maturity: Possible through NDFs, Options or swaps. All of them are net settled. Documentation Requirements FX: Full deliverable Spot and Forwards: On December 29, 2021, Law No. 14,286 was published and a year later its regulations. Therefore, a new FX Landmark became effective in Brazil, with the publication of the Resolutions BCB Nos. 277, 278, 279, 280, 281, all of December 31, 2022. The idea was reducing existing barriers and bureaucracy in the Brazilian FX Market. Although such regulatory change is still recent, it is perceptive a great progress and the Brazilian FX Market is on its way to become simpler and better. According to the Resolution BCB No. 277, of December 31, 2022, the FX Bank, at its own discretion and according to its policies, risk appetite, and counterparty knowledge and analysis, may require or dismiss support documentation as proof of the lawfulness and the economic groundings of the underlying FX transactions for all deals. The FX Bank may also require a FX contract for each transaction closed. Citi currently either requires a FX contract for each deal or accepts that the counterparty sign a Master FX Contract that is valid for all FX transactions and then dismiss the signing of individual FX contracts, which are substituted for FX trade confirmations. If the FX transaction has an amount lower the USD 10,000 or the equivalent in other currencies, Citi may also dismiss the signing of a FX Contract and use only FX trade confirmations. Certain additional requirements may also be applicable.