04/10/23

INTERNATIONAL TAX: Brazil's government seeks Congress vote on bill taxing offshore, closed-end funds this week

As published on: reuters.com, Wednesday 4 October, 2023.

The Brazilian government wants Congress to pass a bill this week that would tax offshore and closed-end funds, and change an instrument companies use for shareholder payments, a government official said on Tuesday.

The bill, which has to pass both in the lower house and senate, is a key part of the government's plan to boost public revenues to erase its fiscal deficit by next year.

"We have an important agenda now of reorganizing tax collection, this agenda is an absolute priority," said the Institutional Relations Minister, Alexandre Padilha, in an interview with CNN Brasil, adding that the government is working to get the bill passed this week.

The bill would establish taxes on closed-end and offshore funds, while also changing the so-called interest on equity (JCP) shareholder payment instrument, which allows companies to deduct it from their corporate tax obligations, the lawmaker sponsoring the bill in the lower house, Pedro Paulo, told reporters before a meeting in the Finance Ministry.

Without giving details, the lawmaker said that instead of ending the instrument, as was the government's original proposal, the idea under discussion was to reform the mechanism to align it with international practices.

A preliminary report on the bill will be presented later on Tuesday, he added.

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Brazil Offshore tax Investment funds International tax