It was dawn when the president of the Chamber of Deputies, Arthur Lira (DEM-AL), was certain that the agreement signed the previous afternoon with the various political parties (including PT and PSOL) would bring him a personal victory in the approval of the tax reform. The basic text was approved by a large majority, leaving 26 highlights to be appreciated by the House. After that, it will go to the Senate and, finally, for presidential approval. To help you understand what has changed with the reform approved so far, DINHEIRO called on a team of experts to comment on the main points of approval.
Personal and Corporate Income Tax
The main structural change in the approved text revises the income tax table for individuals. The first change was to increase the share of citizens who can be exempt from the tax. According to the article, those who receive up to R$ 2.5 thousand per month will not need to declare the tax. In practice, this means that around 5 million Brazilians who now need to declare the tax (and pay taxes) will no longer do so in 2022. The other salary ranges will also have their values adjusted. Check out:
Range 1, up to R$ 2.5 thousand: 0%
Range 2, from R$ 2.5 thousand to R$ 3.2 thousand: 7.5%
Range 3, from BRL 3.2 thousand to BRL 4.25 thousand: 15%
Range 4, from R$4.25 thousand to R$5.3 thousand: 22.5%
Range 5, above R$5.3 thousand: 27.5%
For Roberta Veloso, PhD in tax law and professor at the University of Campinas (Unicamp), despite the important revision of the values being carried out, the reform does not combat the worst distortion in the table, which is band 5. “Saying that someone who receives R $5,400 a month should be taxed in the same way as someone who earns $105,400 is to say that what is left of the middle class needs to pay the same taxes at the top of the pyramid,” he said. For her, this distortion already existed before the reform and shows the little case of the tax system with the social class capable of actually activating the economy. “The consumption of the middle class is essential for the recovery. Decreasing this citizen’s tax is putting money directly into the economy,” he said.
Taxation on profits and dividends
Considered the most controversial of the changes, the Chamber instituted a 15% rate on the distribution of profits and dividends for companies with revenues exceeding R$4.8 million per year. For Douglas de Oliveira, a partner at Oliveira, Securato and Abdul Ahad Advogados, trying to pass this line, as if it were linear, is imprecise. “You end up putting companies with different times, maturity and situations in the same place”, he said. For him, even though charging is seen as part of a compensation strategy, there is no clarity, not even on the part of the government, about the impact of these measures on public accounts. “But it is certain that there will be an impact on company taxes,” he said.
Paulo Duarte, chief economist at Valor Investimentos, understands that the approved text is in line with the one presented by the federal government (although Lira tries to recognize the paternity of the matter on his own). “By lowering the income tax rate and taxing dividends, the government encourages the entrepreneur to invest in the business instead of distributing profits and dividends to the partners.”
The limit for exemption from income tax for the sale of shares goes from R$ 20 thousand per month to R$ 60 thousand per quarter. Carlos Santana, economist and professor at the Federal University of ABC, says that, in practice, the change benefits investors who, for example, sold R$50,000 in one month and nothing in the other two months. and losses with shares on the stock exchange for up to three months and that’s good”, he said.
The text also allows individuals to update the value of their properties in the income tax returns even without selling them. The government will charge a 4% rate on this update. Today, when he sells a property, the taxpayer pays between 15% and 22.5% of income tax on the capital gain he had in relation to the amount that had been declared.
Contribution on net income
The reform foresees a reduction of up to 1 percentage point in the CSLL (Social Contribution on Net Income) collection for companies, already in 2022. With this, the rates charged go from 9%, 15% and 20% to 8%, 14% and 19%. In the original text sent by the government to Congress, this contribution would not change. The proposal also envisages changing the income tax for companies, which will fall from 15% to 8% in 2022. The additional 10% of the IRPJ on profit that exceeds R$ 20,000 per month, which already exists today, is maintained. With that, the maximum rate will drop from 25% to 18%.
End of some exemptions
Reducing taxes without reducing the size of the state requires compensation. The main one should come from the end of the Cofins exemption for some strategic sectors of the economy, such as medicines and chemical products in general. To compensate for the decrease in the CSLL rate, the solution was to encumber part of the production chain. For businessmen, the news fell like a bomb. The pharmaceutical sector, for example, talks about a 12% increase in product prices. Simone Pasionotto, chief economist at Reag Investimentos, in addition to the problem that will be evaluated in each company, the text does not discuss what for her is the biggest problem in Brazilian taxation: the consumption tax. “We need to rethink this at a time when we need to guarantee the consumption of families for the reactivation of the economy after the pandemic”, he said.
A study by the economics department at the Universidade Federal Fluminense points out that the Brazilian GDP could grow between 1.5% and 1.8% per year if consumption were less subject to taxes. “This should be the great point of the tax reform: reviewing the entire system, and not making it, as it has been, a banner for electoral marketing,” he said. For her, the approved reform was hampered by speed, lack of dialogue and does not provide equal treatment to the system as a whole.
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