a President Jair Bolsonaro Wednesday night (21) published two temporary procedures that treat Income tax. While the former cuts from 25% to 6% of the rates that refer to the expenses of Brazilians traveling abroad, the second exempts tax for foreigners who earned income with fixed-income securities issued by national companies.
In the case of the reduction to 6% for Brazilians, the change will take effect in 2023 and 2024. In the following years, there will be a staggering increase in the rate, rising to 7% in 2025, 8% in 2026 and 9% in 2027.
According to the federal government, “This measure reduces, for a period of five years, the IRRF imposed on amounts paid, credited, delivered, used or transferred to an individual or legal entity residing or residing abroad, intended to cover personal expenses, abroad, of individuals residing in the country , in tourist travelor in business, service, training or on official missions”, with a maximum of R$20,000 per month.
In the amendment that includes foreigners, the federal government informs that the extension of zero income tax rates refers to “income obtained from fixed-income securities issued by national companies, distributed in Brazil (for example, bonds), and securities issued by Financial institution (banks, credit unions, etc.)”, obtained by beneficiaries residing abroad.
The government considers that the urgent need for this measure is justified by the possibility of attracting foreign investment immediately.
“In general, debt securities of medium or long duration, so that the return of papers issued after the publication of the interim measure, as well as papers already in circulation, will reflect the increased demand from non-resident investors, thus contributing to support foreign exchange in the state and to reduce the cost of the increase Brazilian companies. “
With the rate cut starting in 2023, there is no impact on revenue for 2022, according to the government. “The measure shall enter into force on the date of its publication and shall enter into force as of January 1, 2023. To be made into law, the measure must be approved by the legislature within the next 120 days.”
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