Chamber approves taxation of offshores and exclusive funds

Brasilia DF) – On Wednesday night (25), the Chamber of Deputies approved bill (PL) project 4,173/23, which provides for the taxation of exclusive funds used by the super rich and offshore companies, which are companies owned by individuals with headquarters in the exterior. The text will be analyzed by the Senate. The measure was approved with 323 votes in favor and 119 against.

The approval represents part of the package from the Ministry of Finance, led by Minister Fernando Haddad (PT), whose objective is to eliminate the deficit in public accounts by 2024 and boost government revenue.

The ministry’s proposal initially estimated that changes in tax collection from offshore companies and exclusive funds for the super-rich could result in total revenue of R$20 billion. However, changes made in the Chamber should reduce this initial revenue forecast.

Processing under a constitutional urgency regime, the text had been on the agenda of the Chamber plenary since October 14th. As a result, no other bill could be voted on until the urgent text was analyzed by the plenary.

Offshore

Offshore is a nomenclature used for investments made abroad. Generally, these funds are based in another country and have international assets. In many cases, however, the manager of this investment is in Brazil.

Currently, in the case of offshore companies, taxation only occurs if a company located abroad transfers the company’s profit to the individual partner in Brazil. If the partner, however, chooses to keep the resources abroad, taxation is postponed and, in some cases, does not even happen.

According to Pedro Paulo’s opinion, taxation will be done at a rate of 15%, regardless of income values, on an annual basis.

According to the text, the exchange variation of deposits in a current account or on a debit or credit card abroad will not be subject to taxation “as long as the deposits are not remunerated and are maintained in a financial institution abroad recognized and authorized to operate by the monetary authority of the country”. country in which it is located”.

The exchange variation of foreign currency in cash will not be subject to taxation up to the limit of currency sales equivalent to US$5,000 in the year.

Exclusive backgrounds

Exclusive funds are products created specifically for one or a few shareholders (generally members of the same group or family). Currently, taxation only occurs when the application is redeemed.

Data from the federal government show that 2,500 Brazilians have resources invested in these funds, which accumulate to R$756.8 billion. They correspond to 12.3% of funds in the country.

According to the proposal, income from investment funds will be subject to periodic semi-annual taxation (called “come-quotas”), with rates of 15% in the case of long-term funds, and 20% in the case of short-term funds.

One point that was the subject of negotiations was the change in the requirements for exemption from Income Tax for individuals on income from Investment Funds in Agroindustrial chains (Fiagros) and Real Estate Investment Funds (FIIs).

Currently, to be exempt from income from FIIs and Fiagros, the funds must have a minimum of 50 shareholders. Pedro Paulo increased the number of shares to 100 and limited the shares that family members up to second degree can hold up to 30%.

Pedro Paulo also welcomed a suggestion that companies operating in the country, with virtual assets, regardless of their domicile, be obliged to provide periodic information on their activities and their customers to the Federal Revenue Service and the Financial Activities Control Council (COAF) .

Income update

When sent to Congress, the government’s proposal provided for a 10% fee for those who choose to update their income by December 31st of this year.

In the first version of the report, Pedro Paulo reduced the rate to 6%, but after conversations with leaders, he increased the percentage to 8%.

Taxation applies to exclusive funds and offshores, being voluntary for the latter.

“It is an incentive that is given and this window is opened for this anticipation until December of an update of this stock at 8%”,

said the rapporteur.

From January 2024, the rates established for income from offshore companies and exclusive funds will be valid.

*With information from CNN Brasil

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