Brazil Government To Tax Income From Financial Investments Obtained Abroad
- Brazilian President Luiz Inacio Lula da Silva's government published an executive order aimed at increasing revenue by taxing the capital income from financial investments obtained abroad by individuals who reside in Brazil.
- Income earned from January 1, 2024, will be considered for that purpose, said the text of the measure published on Sunday night that takes effect immediately. It must be voted on by Congress within four months to become permanent law.
- According to the text, income obtained abroad from financial investments will be taxed upon the sale or maturity of assets, while profits and dividends from controlled entities will be taxed on December 31st of each year. The measure also includes the taxation of assets in trusts.
- Income up to 6,000 reais (US$1,203) will be tax-exempt, while income above that but below 50,000 reais will be taxed at 15%. Income exceeding 50,000 reais will be taxed at 22.5%.
- The Finance Ministry said the measure has the potential to collect around 3.2 billion reais (US$641Mn) in 2023, close to 3.6 billion reais in 2024 and 6.7 billion reais in 2025.
- The measure was published in an extra edition of the official gazette, but Lula did not mention it during his Labour Day speech last Sunday, where he pledged to introduce a new policy of real increases in the minimum wage and announced plans to raise the income tax exemption for lower-income earners.
- Leftist Lula's economic team has emphasized that the government will seek to balance public accounts by taxing those who should but are not paying taxes. However, Sunday's measure was not disclosed on official government channels.
(Source: Reuters)