what changes in taxes in 2024

In addition to the traditional update in the calculation bases for the Urban Property and Land Property Tax (IPTU) in municipalities across the country, new incidence rules, the end of exemptions and the increase in federal and state tax rates should also weigh on the pockets of most taxpayers in 2024.

At the federal level, changes in the coming year include the incidence of Personal Income Tax (IRPF) on offshore companies and exclusive funds, the re-encumbrance of diesel, biodiesel and cooking gas with PIS and Cofins and even the possibility of charging Import Tax on online purchases under US$50 from foreign retailers.

For companies, subsidies authorized by states no longer have a discount on Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL) when used for funding purposes. Rules for Interest on Equity (JCP) also change, limiting the use of the mechanism to reduce the federal tax base.

Part of the changes were proposed by the Ministry of Finance to increase revenue in order to meet the goal of closing the deficit in 2024. But there are also new developments at the state level.

The Tax on the Circulation of Goods and Services (ICMS), which is a state responsibility, will rise in at least nine states. And even the federative units that will not promote a linear increase will have the tax rate on fuels raised from February onwards.

Changes that came into force with the tax reform may also increase the Causa Mortis and Donation Transmission Tax (ITCMD), in addition to allowing the collection of Motor Vehicle Ownership Tax (IPVA) also on air and water vehicles.

Check out the main tax changes already scheduled for 2024 below:

Exclusive funds will be taxed periodically

Coming into force from January 1st, Law 14,754/2023 amended a series of laws, including the Civil Code, to tax or increase IRPF rates on exclusive funds (investment funds with a single shareholder), normally used by the so-called super-rich.

Investors in this modality will be taxed on 15% of income on long-term funds or 20% in the case of short-term funds (up to one year). Longer application deadlines will have lower rates due to the IR regressive table.

From 2024 onwards, the amounts will be collected once every semester through the “come-quotas” system, through which the Federal Revenue Service retains a number of customer quotas equivalent to the IR due, which is withheld at source. The charge only applies to profits, not to invested capital.

In addition, closed-end funds — which do not allow the redemption of shares within their duration — will also have to pay IR on gains accumulated from January 1st. Currently, these funds are only taxed at the time of redemption of the investment, which may never occur, as their validity can be extended by the investor.

Investments in offshore companies will pay IRPF every year

The same law, sanctioned in December by President Luiz Inácio Lula da Silva (PT), establishes a 15% annual rate on income from 2024, even if the money remains abroad, in so-called offshore companies. Collection will occur in advance, with the same rules as for exclusive funds.

Currently, a 15% income tax rate is already charged on capital gains from resources invested in offshore companies, but taxation only occurs on resources that return to Brazil. In other words, once outside the country, this income could never actually be taxed.

The text also taxes profits from entities controlled by individuals resident in the country located in tax havens or beneficiaries of a privileged tax regime. Companies abroad with their own active income of less than 60% of total income will also be taxed.

The individual may still irrevocably and irreversibly declare, through an annual adjustment declaration to be delivered in 2024, the assets and rights of the entity controlled abroad as if they were theirs.

Changes in subsidies and JCP increase tax burden on companies

Another measure proposed by the government approved by Congress provides that, from 2024, companies taxed on real profit and that have ICMS incentives from state governments for investment will start receiving IRPJ tax credits. Until now, exemptions were deducted from the IRPJ and CSLL calculation base.

Furthermore, from January 1st, the Union will be able to tax subsidies that are used only for funding and are not linked to investment.

The approved text also changes rules on the use of JCP. The instrument is a form of distribution of profits among shareholders that can be treated as an expense in the company’s results. Therefore, it is used by companies to reduce the IRPJ and CSLL tax base, generating less revenue for the Union.

From 2024 onwards, only resources referring to the paid-in share capital (transferred to the company’s activities), capital and profit reserves provided for by the law on Joint Stock Companies (SAs), in addition to treasury shares and the amount corresponding to the recorded profit.

Positive variations in net equity resulting from corporate acts between dependent parties that do not involve the effective transfer of assets to the legal entity are no longer considered.

Reform allows IPVA on jets and yachts and progressive ITCMD

Although the main changes promoted by the tax reform, approved in December, will only come into effect from 2026, some provisions have already come into force with the promulgation of the text, on the 20th.

One of them allows states to collect IPVA from owners of aircraft and vessels – collection starting in 2024, however, will depend on the decision of each state administration.

The reform also changed ITCMD rules, which now also apply to residents abroad and will have a progressive rate. The new rule applies to succession processes opened after the promulgation of the text.

With the mandatory progressive system, the tendency is for the tax to increase in states where the collection was made in the form of a fixed percentage, such as Acre, Alagoas, Amapá, Amazonas, Federal District, Goiás, Mato Grosso do Sul, Minas Gerais , Paraná, Rio Grande do Norte, Roraima and São Paulo.

Several states will increase the standard ICMS rate

The ICMS rate will also increase in at least nine states in 2024. As the tax is charged in the location where the good or service originates, the measure may have an impact on taxpayers across the country.

The decision reflects a need for state administrations to recover lost revenue from measures taken in 2022 that reduced revenue from state coffers.

The first federative unit to announce an increase in ICMS for 2024 was Ceará, where the Legislative Assembly approved an increase in the standard rate from 18% to 20% in February this year. In October, the states of Pernambuco (18% to 20.5%), Paraíba (18% to 20%), Rondônia (17.5% to 19.5%) and the Federal District (18% to 20%) followed suit. ). In November, it was Bahia’s turn (19% to 20.5%).

At the end of November, six of the seven states in the South and Southeast regions jointly announced the decision to raise their ICMS rates – only Santa Catarina was left out. The governments of Rio Grande do Sul and São Paulo, however, ended up giving up on the idea before submitting the bill to their respective legislative assemblies. The governor of Espírito Santo, Renato Casagrande (PSB), said he will revoke the law that would increase the ICMS modal rate from 17% to 19.5%.

In Paraná, the increase, already approved and sanctioned by Ratinho Júnior (PSD), went from 19% to 19.5%. In Rio de Janeiro, the standard ICMS will rise from 18% to 20%. As it needs to respect the nineteen period to become effective, the increase in the tax will begin on different dates in each federative unit.

ICMS on fuels will rise 12.5% ​​from February

Even in states where there will be no increase in the ICMS modal rate, the state tax on fuels will rise by 12.5% ​​from February 1, 2024. The increase was decided in October, by the National Council for Financial Policy (Confaz ).

The fixed rate (ad rem) of ICMS on gasoline and ethanol will increase from R$ 1.22 to R$ 1.3721, according to the agency’s decree published in the Official Gazette of the Union. In the case of diesel and biodiesel, the rate will increase from R$ $0.9456 to R$1.0635. The tax on cooking gas (LPG) and liquefied gas derived from natural gas (GLGN) will rise from R$ 1.2571 to R$ 1.4139.

Diesel and biodiesel will once again be charged PIS and Cofins, zero since 2022

From January 1st, PIS and Cofins will also be levied again on diesel and biodiesel. The fossil fuel has the addition of 12% biodiesel to make up the so-called diesel B, which is sold at gas stations. Considering the mixture, the increase will result in an increase of R$0.33 per liter.

Tax rates have been zero since March 2022, when then-president Jair Bolsonaro (PL) decided to waive taxes to contain the rise in the sector on the eve of the election campaign.

At the time, a complementary law proposed by the Executive and approved by Congress provided for the exemption only until December 31, 2022. On January 2, 2023, in one of his first official acts, Lula published a provisional measure (MP), at 1,157 , extending the discount for another year. In May, the text was incorporated into Law 14,592/2023.

A partial resumption of the collection of PIS and Cofins on diesel even occurred between June 5th and October 3rd due to MP 1,175, which created a subsidy program for automotive manufacturers and determined the collection of taxes as a form of compensation. The MP, however, was never voted on by the Legislature and expired. As a result, the tax exemption came into effect again until December 31, 2023.

On the 26th, Haddad said that, despite the increase, the consumer should not notice an increase in the price of diesel due to the two cuts in the price of fuel promoted by Petrobras in December.

“From January 1st, diesel will be re-encumbered, and this re-encumbrance that will be made has an impact of just over 30 cents. If you compare the price of diesel, there will be a drop in price, even with the increase. It’s good to pay attention. Petrobras announced today [terça, 26] a second cut that more than compensates for the January increase. You have to pay attention. When there is an argument about a price increase, it has nothing to do with it,” he stated.

Purchases under US$50 may be subject to tax even with Conformal Shipping

The federal government is also considering ending once and for all, in 2024, the exemption from Import Tax on purchases made online from foreign retailers. Today, purchases made on platforms that are part of the Remessa Conform program do not pay the tax if the final value of the transaction, including shipping, is below US$50 – in this case, only the ICMS, which is the state’s responsibility, is levied.

Above R$50, orders are charged 60% by Import Tax. A technical note from the Federal Revenue Service used as a reference for the preparation of the 2024 Annual Budget Law (LOA) considered a tax rate of 28% to estimate the potential for revenue on purchases below this level. According to the document, revenue from the new taxation could reach R$2.8 billion.

In November, the vice-president and minister of Development, Industry, Commerce and Services, Geraldo Alckmin, reinforced the government’s intention. “Work has been done on digital platforms to formalize imports, ICMS taxation has already started and the next step is import tax, even for those with less than US$50”, he said, during an event in Brasília.

On the 22nd, Haddad said, however, that the measure has not yet been confirmed and that the matter is being “matured”. “The topic is controversial in the government and Congress. I heard several opposition parliamentarians asking for measures to be taken for this and others waging war on social media. […] There is no decision on the part of the government on this”, said the minister during a breakfast with journalists.