Government will send PL to tax super-rich funds – 07/19/2023 – Market

The Minister of Finance, Fernando Haddad, said this Wednesday (19) that the government will submit a bill to tax exclusive investment funds, aimed at high income (called super-rich).

The proposal will be sent to Congress along with the 2024 Budget, which needs to be submitted by August 31. This is required so that expected revenue from the measure can be factored into revenue estimates. The amounts will help to reach the zero deficit target next year.

Haddad confirmed sending the measure in a quick interview to journalists after a meeting with the mayor, Arthur Lira (PP-AL), to “set the agenda for the second half”.

“There is a set of measures that go along with the Budget and that do not go through the Income Tax of Individuals”, said the minister. Asked about the taxation of exclusive funds, he said that the initiative is foreseen and “should go as a PL (bill)”.

Increasing revenues is a central pillar for the sustainability of the new fiscal framework. The economic team outlined ambitious goals for the mandate and promised to zero the deficit next year.

Exclusive investment funds are those in which few shareholders maintain expressive amounts in investments. Today, those who invest in these funds collect IR (Income Tax) only when redeeming the resources, which can take years.

The system is different from other funds, which are subject to the so-called “quota-eater”, charged periodically on earnings.

The government had already been discussing since March the possibility of starting to charge the “quota-eater” also on exclusive funds.

In 2017, the Michel Temer (MDB) government issued an MP (provisional measure) to institute the periodic collection of IR on exclusive funds, every six months.

At the time, the estimate was to raise BRL 10.72 billion with the collection of 15% income tax on income accumulated since the creation of the funds until May 31, 2018.

Inventory taxation is the main source of revenue for this measure, but it was also one of the points of greatest resistance in the National Congress. The MP ended up not succeeding in the face of political obstacles and lost its validity without the Executive raising a penny.

In an interview with columnist Mônica Bergamo, from SheetHaddad signaled that he could propose the taxation of exclusive funds.

“What about exclusive funds, in which a person delegates shares to their descendants and never pays income tax? These are things that draw the world’s attention to Brazil. Workers today are exempt [de imposto de renda], thanks to President Lula, up to R$ 2,640. You won R$ 2,650, already paid. And is a person who earns BRL 2.64 million exempt?