As published on: brazilian.report, Friday 28 July, 2023.
Brazilian Finance Minister Fernando Haddad on July 19 said the government has a plan to tax so-called “exclusive funds,” that is, investment funds for the super-wealthy. Their name comes from the fact that these funds often have a single investor and are offered only to those who have more than BRL 10 million (USD 2.1 million) in assets.
Mr. Haddad has pledged to send a bill on this to Congress along with the 2024 budget. He hopes the move will generate more than BRL 10 billion in new tax revenue.
According to its own new fiscal framework proposal, which still needs congressional approval, the government must zero the public deficit by the end of next year. As Mr. Haddad has promised not to raise taxes, the only solution is to boost revenue.
This bill, Mr. Haddad explained, is part of the second stage of a tax reform supported by the government, the first stage of which was approved by the House (but is still pending in the Senate).
How taxing exclusive funds might work
Because the super wealthy have large amounts to invest, they have the luxury of getting an exclusive manager who decides where their money goes. The so-called “exclusive funds” are commonly used for estate planning as well, so these individuals can pass on their wealth to future generations.