Taxes on Offshore Capital May Achieve R$3.25 Billion in 2023 | capital Cities

Brazil “is now adopting a rule already in use by most developed countries,” the finance ministry says in a press release.

According to estimates released on Monday (5/1) before Ministry of FinanceTemporary measure 1171/23, which increases taxes on capital invested abroad by residents, has the potential to generate R$3.25 billion in 2023.

In a press releasereleased this afternoon, the ministry states that Brazil “begins to adopt a rule already in use by most developed countries,” including Germany (since 1972), Canada (1975), Japan (1978), and France (1980), and the United Kingdom (1984) and China (2008).

In the text, the Treasury Department also says that “the measure is widely recommended by the Organization for Economic Co-operation and Development” (OECD).

“These measures are likely to collect about R$3.25 billion for 2023, approximately R$3.59 billion for 2024 and R$6.75 billion for 2025,” says the ministry led by Fernando Haddad.

“With regard to updating the monthly IRPF schedule values, the decrease in revenue is estimated in 2023 of R$ 3.20 billion (referring to 7 months), in 2024 of R$ 5.88 billion and in 2025 of R$ 6.27 billion,” the note from the Treasury continues.

According to the volume, the deputy will solve, among other problems, issues such as the R$1 trillion increase in the assets of individuals abroad “who pay practically nothing from the IRPF on passive income.”

In the memo, the ministry also refers to “the use of structures in ‘tax havens’ (offshore) by individuals residing in the country to avoid or delay the imposition of income tax.”

Like the capital Cities I mentioned earlier, citizens who hold financial investments, controlled entities and so-called trust funds – financial funds used to manage amounts from third parties will pay more in federal taxes.

Also according to the MP, income earned from 2024 from financial investments abroad by residents of Brazil will be taxed. The IR rates to be charged vary from 0% to 22.5%, depending on the amount of income.

The measure, according to the Finance Ministry’s calculations, would cover the drop in revenue that would be produced by updating the IR schedule, which would begin exempting taxpayers earning up to a minimum wage, or R$2,640.