On May 9, 2016, Normative Instruction RFB No. 1634 was published with the purpose of updating the regulatory provisions related to the Corporate Taxpayer Registry (CNPJ) by inserting new rules that essentially increase transparency about the origin of funds invested in Brazil and their holders, thus providing a mechanism against corruption, money laundering and tax evasion.

From January 1, 2017, the register of information by business entities and “legal arrangements” domiciled in Brazil or abroad --notably, clubs and investment funds and entities with assets and/or those conducting operations in the country -- should include all information on persons authorized to represent them, as well as its chain of corporate interest, before reaching the individuals defined as "Final Beneficiaries".

According to the Normative Instruction, the "Final Beneficiary" is the person who directly or indirectly owns, controls or significantly influences the business entity, or persons on whose behalf a transaction is conducted. "Significant influence" means that a Final Beneficiary possesses more than 25% of the entity's capital, directly or indirectly, or holds or exercises a preponderance of corporate resolutions and the power to elect a majority of its directors. “Significant influence” also describes beneficiaries who, even, without holding the majority of the capital, demonstrate use of their power by effectively managing corporate activities and guiding governing bodies. The Receita Federal do Brasil clarifies which corporate event will determine the need to provide said information, considering that the aforementioned criteria is not objective nor consolidated, but dynamic over time and subject to the influence of other factors beyond the mere isolated action of a beneficiary.

In regards to the real estate market, the disclosure of the entire chain of corporate interests may come to affect (or at least bureaucratize) some ordinary real estate transactions in the market, such as the acquisition of rural land, land located in the marine area or in borderland strip areas owned by Brazilian companies controlled by foreign partners. This also bureaucratizes processes involving indirect control by a foreign person due to increase attention from INCRA, the National Defense Council, Union Heritage Secretary, Public Notary Offices and Real Estate Registry Offices or the need of having to disclose the identities of individuals behind the holders of the investment funds if said shareholders are legal entities. Further complications will be created by restrictions imposed by regulatory agencies of certain sectors of the economy that impose legal restrictions on foreign capital.

Finally, for entities already registered in the CNPJ before January 1, 2017, information related to the Final Beneficiaries may be updated before December 31, 2018.