With MP on investments abroad, government buys fight with wealthy

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The federal government published this Monday (1st) a Provisional Measure (MP) that brought the taxation of investments abroad made by individuals with tax residence in Brazil and, with that, picked a fight with businessmen and investors in the financial market. The MP brings a change: while it relieves the middle class by raising the income tax exemption range to R$ 2,640, it starts to demand that investors abroad, with tax residence in Brazil, pay tax on earnings abroad. In addition, it makes trusts of individuals residing in Brazil more transparent for income tax purposes. Lula confirms minimum wage of R$1,320 as of May and increase in income tax exemption to R$2,640 In recent weeks, the Minister of Finance, Fernando Haddad, has frequently hit on a key: taxation of those who do not pay taxes. In all speeches, public speeches and interviews, the same message was embedded: “It’s time to charge those who don’t pay”. “You have to be rich not to pay taxes. Being rich is that you acquire the right not to pay income tax”, said Haddad on one occasion. “If those who don’t pay taxes start paying, we’ll all start paying less interest,” said the minister on another occasion. Despite the warnings, a large part of businessmen, investors and the financial market were startled by the Provisional Measure published this Monday (1st). In practice, the MP is reasonable because if those who invest in Brazil pay taxes on income, it is correct for the government to tax offshore companies. The measure affects a small portion of the population, even if noisy, and that includes members of parliament – congressmen who will have to vote for the MP. This is the first point that the government will have to face for the measure to be valid for more than its initial four months. According to sources heard by the blog, the government agrees to negotiate adjustments, as a much criticized point is the calculation of the exchange rate variation at the time of taxation of a good. Previous governments lost similar battles in Congress – such as taxation of exclusive funds, used by those who have more than a few tens of millions invested, or taxation of dividends – but the current economic team wants to bring the discussion of privileges when paying taxes to the table. “If society debates with transparency and thinks it is fair for some groups not to pay taxes, that is correct. The problem is when this discussion is never done and is out of the sunlight”, said the executive secretary of the Treasury, Gabriel Galípolo, to the blog. VIDEOS: News on Economics

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