Market predicts escape of exclusive funds of R$700 billion with new taxation

The proposal to tax a 15% rate on the future income of exclusive funds in Brazil, aimed mainly at the so-called “super-rich”, is generating concerns among leaders in the Chamber of Deputies. The rapporteur of the proposal, deputy Pedro Paulo (PSD-RJ), warned about the risk that the measure could result in the migration of these applications to other tax-exempt financial instruments, which could harm the expected revenue.

The current system allows holders of exclusive funds to pay Income Tax on gains only upon redemption of shares or liquidation of the fund, without the application of “come-quotas”, which is a semi-annual charge applied to other types of funds in the Brazil.

The government’s proposal sets a rate of 15% on income, to be paid in May and November from 2024 onwards, maintaining the original model proposed by the government. On the stock of investments in exclusive funds, the charge was reduced to 6%.

“What will the movement of assets be like, of these R$700 billion that are the stock of investments in exclusive funds? A calibration error and you could have a movement that generates revenue initially, but affects the capital market significantly. With an excessive rate, you make exclusive funds unviable and they go to other long-term assets that have some type of tax incentive”, said the rapporteur in an interview with Newspaper published this Wednesday (11).

In addition to the taxation of exclusive funds, the measure also covers the taxation of resources held by Brazilians in tax havens, which are often used to avoid paying taxes. The proposal provides for taxation of profits obtained with these resources at up to 22.5% of the gains, once a year, regardless of whether the investments are redeemed and repatriated.

Pedro Paulo also made concessions in the taxation of offshores, reducing the rate from 10% to 6% on the gain. He emphasized that the objective is to correct asymmetries and promote taxpayer compliance in paying taxes, rather than redistributing wealth.

“If they are assets, assets, it is one thing. Another thing is operational resources, which capitalize companies, resources that are rotating. We are seeing if it is possible to differentiate this by modality, a characteristic of offshore,” he said.

The schedule foresees the vote on the text next Tuesday (17), with the support of the team of the Minister of Finance, Fernando Haddad, and after an agreement with the president of the Chamber of Deputies, Arthur Lira (PP-AL), who will be traveling abroad during the period.

Voting on the tax bill offshores It is part of an agreement made to overcome the obstruction of the House’s work in the previous month, led by the opposition and the ruralist bench.