DME declaration. Cash transactions, including those with foreign currencies, for the acquisition of goods and services with amounts equal to or greater than R$ 30 thousand must be reported to the Federal Revenue Service by individuals and legal entities starting in 2018. The new requirement is provided for in Normative Instruction RFN No. 1,761, published in the November 21 edition of the Official Gazette of the Union.
According to the Revenue Service, the need for the Tax Administration to receive information on all relevant transactions settled in cash arises from the experience observed in various special activities that the agency has carried out over the last few years, in which these transactions have been used to conceal tax evasion, corruption, and money laundering – especially when the beneficiaries use the illicit funds in the acquisition of goods or services and do not intend to be identified by the tax authority.
The Federal Revenue Service further stresses that examples of reporting relevant cash transactions have been a direction adopted by several countries as a measure to combat the practice of financial illicit acts, among which money laundering and the financing of arms trafficking and terrorism.
According to the government, the transactions will be reported in an electronic form called the Declaration of Transactions Settled in Cash (DME), available on the website of the Federal Revenue Service. Financial institutions regulated by the Central Bank of Brazil are not subject to the submission of this document.
When the transaction is settled in foreign currency, the transaction must be converted into reais for the purpose of the declaration.
The new rule does not seek to identify the current stocks of physical currency held by individuals or legal entities, but rather to identify the use of these funds when those persons actually settle various acquisitions.
The tax authorities currently have the ability to identify the person who settles deferred-sale transactions, which result in the issuance of a commercial duplicate, and cash transactions, when settled by bank transfer or payment by credit card. This Normative Instruction seeks to close the information gap regarding transactions settled in physical currency.
Penalty – An individual or legal entity that receives funds in cash in amounts equal to or greater than R$ 30 thousand and does not declare the transaction to the Federal Revenue Service will be subject to a fine of 1.5% to 3% of the transaction value, respectively, when omitting information or providing it in an inaccurate or incomplete manner.
With the aim of simplifying the provision of information by the entities that are currently required to provide information to the Council for Financial Activities Control (Coaf), based on Law No. 9,613, of March 3, 1998, the present rule provides that the Federal Revenue Service and Coaf may issue a joint act so that the information is provided exclusively in the DME and subsequently shared with the Council.
Read also:
The Federal Revenue Service updates the CNPJ rules relating to the concept of beneficial owner
Compliance is poorly represented in the public sector and in small companies
← Back to blog