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Haddad will propose ending interest on shares to raise revenues by R$10 billion

Haddad will propose ending interest on shares to raise revenues by R$10 billion

Fernando Haddad

BRASILIA (Reuters) – Two sources said the government will on Thursday propose initiatives aimed at expanding federal revenue and making the primary deficit as zero as possible in 2024, including a measure providing for the end of the JCP by companies. From the Ministry of Finance accompanying the order.

The package would also include a temporary measure to regulate the Supreme Court of Justice (STJ) ruling limiting federal support arising from state tax incentives.

According to sources, the portfolio expects that the end of the JCP mechanism will generate a collection of 10 billion riyals in 2024. In turn, the MP for grants has an estimated impact of about 37 billion riyals in the same period.

Other governments have tried in vain to abolish interest payments on shares. By choosing this form of bonus instead of a dividend, companies can deduct the amount distributed from their taxable income.

On subsidies, the Treasury Department wants to fine-tune the TJ’s decision. The court ruled in April that the federal government may charge corporate income tax (IRPJ) and social contribution tax on net income (CSLL) on tax benefits granted by states, provided they are not classified as presumptive credits and meet legal requirements.

Follow up on recommendations

The initiatives will be proposed on the same day the government sends the 2024 annual budget bill to Congress, which, according to the economic zone ministers, would stipulate a zero primary deficit target.