03/18/2024 – 21:45
The Ministry of Finance will send this Tuesday (19) to the Civil House the bill that simplifies the collection of taxes on financial investments, said this Monday (18) the Minister of Finance, Fernando Haddad. He informed that the taxation of dividends, the main point of the Income Tax reform, will be delayed, but will come out this year.
According to Haddad, the project text on financial investments is “agreed” with the financial market and should not face resistance. The Civil House will analyze the project before sending it to Congress, which does not have a date for this to be done.
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This Tuesday, the 90-day period established by the constitutional amendment for tax reform ends for the government to send the bill that reforms income and salary taxation to Congress. Haddad, however, denies that the government is failing to comply with the Constitution because, in December of last year, it issued the provisional measure reimbursing the payroll, which is included in the topic.
“At the end of December, we were already complying with the constitutional norm,” said Haddad upon leaving the Ministry of Finance. The minister explained that the government chose to divide the income tax reform into several bills. Last year, the government advanced part of the reform by sending to Congress the project that taxes offshores (investment companies abroad) and anticipates the collection of Income Tax on exclusive funds.
Double taxation
Regarding the taxation of dividends, the portion of a company's profit distributed to shareholders tax-free, Haddad said that the text will take some time to complete. According to the minister, more studies are needed to avoid double taxation, charging the same tax twice.
“We cannot tax [pessoa] legal and [pessoa] physics by adding the rates. Our commitment has always been to keep the tax burden stable. And this commitment continues to be maintained. Remembering that any increase in tax on income or assets will be used to reduce the tax rate on consumption, so that general taxation in Brazil remains constant, but fairer”, explained Haddad.
To keep the tax burden constant, the economic team wants to tax dividends and, at the same time, reduce Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL). If there is no such compensation, taxation on profits in Brazil would rise considerably, to the point of inhibiting the opening of companies and the creation of jobs.
According to the minister, both the taxation of dividends and the reduction of taxation on profits will be included in the same project. Haddad also said he sees Congress' willingness for this debate.
In 2021, the Chamber approved a bill, currently stalled in the Senate, which allowed the taxation of 15% of profits and dividends at source, but reduced the IRPJ from the current 15% or 20% (depending on the size of the profit) to 8 %. The process was paralyzed because the Senate understood that the reduction in IRPJ would create a hole in public accounts and would violate the Fiscal Responsibility Law.
Regulation
Regarding the regulation of tax reform on consumption, whose constitutional amendment was enacted in December, Haddad said that the government must simultaneously send two complementary bills to the Civil House by the end of the month. The texts, informed the minister, will first be sent to the Civil House and other departments directly involved with the topics.
According to Haddad, the economic team decided to give priority to the regulation of taxes on consumption and the taxation of financial investments. Income Tax reform will come later. “We will not overlap subjects. We have the consumption tax to regulate now,” he declared. Any increase in taxes on income or wealth, highlighted the minister, will be used to reduce consumption taxes.
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