30/08/23

INTERNATIONAL TAX: Lula Signs Provisional Measure to Tax Super-Rich Funds

As published on: 1.fohla.uol.com.br, Wednesday 30 August, 2023.

President Luiz Inácio Lula da Silva (PT) signed this Monday (28) a provisional measure to tax income from exclusive funds, the so-called "super-rich", and sent a bill to tax offshore companies. Measures were taken to obtain new revenue and, according to the government, correct distortions in legislation. Part of the resources will be used to offset the expansion of the Income Tax exemption range.

Exclusive funds are millionaire investments in assets such as stocks or fixed income —or both— made in Brazil. Offshores are companies opened abroad, usually in tax havens, where taxation is reduced or zero, such as the Cayman Islands. Both can be used to avoid paying taxes in the country.

The provisional measure and the bill were announced by the government during a ceremony at the Presidential Palace when Lula sanctioned the new IR ( Income Tax) table and the minimum wage of R$ 1,320. The taxation of funds takes effect immediately, as provisional measures have the force of law and must be approved within 120 days by Congress in order not to lose their validity.

In addition to the provisional measure for exclusive funds generating resources to cover the drop in revenue with changes in the Income Tax, the Lula government claims that the new rules are intended to make the tax system more equitable and transparent. According to the Ministry of Finance, the provisional measure will "level the playing field between different forms of investment".

Tags

Brazil International Tax Super Rich HNWI Wealth Tax