This is a translation of the original article in Portuguese. Read the original (Português).
The Workers’ Party (PT) caucus in Brazil’s Chamber of Deputies filed four bills on Friday (13) that expand taxation on high earners, large assets or investments that are currently exempt. The proposals address profits and dividends, large fortunes, bank-issued securities known as LCI and LCA, and interest on equity (JCP).
According to the website Seu Dinheiro, one of the texts establishes withholding income tax of 15% on profits and dividends paid to individuals, the same rate in force until 1995. Today, recipients are exempt up to R$ 50 thousand per month from each company. That limit would cease to exist if the bill is approved.
The second bill creates a tax on the net worth of individuals above R$ 15 million, according to the website SP Diário. The rate starts at 0.7% and rises to 3% on the amount exceeding R$ 200 million. The revenue would go to the Fund to Combat and Eradicate Poverty.
The website Space Money reports that another proposal would impose a 7.5% income tax on income from LCI and LCA, which are currently exempt for individuals, as well as other securities that enjoy exemptions. The fourth bill raises the JCP rate from 17.5% to 20%.
What changes for each profile
For a partner in a company who withdraws monthly profits, ending the exemption would mean having 15% withheld at source from the first real distributed, including amounts up to R$ 50 thousand per company. Those who receive dividends from several companies would also be affected, since the cut applies to each paying source.
For fixed-income investors, the 7.5% tax on LCI and LCA would reduce the net return on instruments that are sought precisely because of their exemption. Raising JCP to 20% makes this method of rewarding shareholders, used by companies, more expensive.
The tax on large fortunes would affect only those with net worth above R$ 15 million, a very narrow segment of the population.
The debate in Congress
The bills bring back to the Chamber’s agenda the discussion on tax fairness, amid debate over adjusting public accounts. Because they are proposals from a caucus, they still need to be assigned to committees, analyzed and voted on by deputies and then by the Senate. The responsible bodies have yet to set the pace of processing.
Topics such as taxing dividends and large fortunes have already come up in previous discussions in Congress, and eventual approval would depend on support beyond the party that submitted the texts.
Reporting from BPMoney (Brasília/DF), SP Diário (Brasília/DF), Seu Dinheiro (Brasília/DF), Space Money (Brasília/DF).
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