Brazil targets banks in income tax hike bill
BRASILIA, Aug 30 (Reuters) -Brazil's government submitted a bill to Congress on Friday that increases some income taxes as part of a revenue-raising effort, including a more pronounced rate hike for banks.
The bill proposes changes to the social contribution tax on corporate income (CSLL) and interest on equity payments (JCP).
Last week, Finance Minister Fernando Haddad said the two proposals would be sent to Congress to ensure compliance with budgetary rules, in case compensation measures outlined by Congress are insufficient to offset the effects of payroll tax exemptions approved by senators.
However, he had not provided details of the size of the taxes hikes.
The text proposes to increase the CSLL rate for banks to 22% until the end of 2025, returning to the current level of 20% from January 2026.
The proposal for private insurance companies, capitalization firms, and brokerages is to increase the CSLL rate to 16% until the end of 2025, reverting to the current 15% the following year.
For other companies, the rate would rise to 10% until the end of 2025, returning to the current 9% in 2026.
Regarding JCP, a form of shareholder remuneration that allows companies to deduct these payments from their corporate tax obligations, the government’s proposal suggests raising the income tax rate to 20% from the current 15%.
The government of leftist President Luiz Inacio Lula da Silva has until this Friday to submit its 2025 budget bill to Congress, detailing expenses and forecasting revenues to meet next year's fiscal target, which aims for a zero primary deficit, with a tolerance margin of 0.25% of GDP either side.
In practice, submitting the first bill that raises income taxes in specific situations provides a legal basis for including these projected revenues in the budget bill proposal.
Reporting by Marcela Ayres
Editing by Marguerita Choy
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
