Congress approves the basic text of the IR reform. what changes for you


After agreement between the president of the Chamber, Arthur Lira (PP-AL), and deputies who were still resistant to the proposal, the plenary of the Chamber approved this Wednesday, 1st, the income tax reform. The score was 398 votes in favour, 77 against and five abstentions.

The plenary will still vote on the highlights, which are suggestions for changing the approved basic text. After passing through the Chamber, the bill needs to be evaluated by the Senate before going to President Jair Bolsonaro’s approval.

Among other changes, the bill provides for a reduction in corporate income tax and the creation of a payment on dividends. The IRPJ, currently 25%, will drop to 18%. The initial proposal of the rapporteur, Celso Sabino (PSDB-PA), was to reduce the collection to 12.5%, but deputies pointed out that the loss of tax revenue in the states would be very large.

The text also lowers CSLL, from the current 9% to 8%. In return for the cuts made to the companies, a 20% charge will be created on the distribution of dividends. Micro and small companies of Simples and presumed profit, with sales of up to 4.8 million reais, will be exempt from payment. One of the highlights that will be voted on intends to reduce the tax on dividends to 15%.

Before the vote, Sabino removed from the text all restrictions previously made to the simplified declaration of the IR of individuals. The government’s initial idea was to allow the simplified declaration only for people with an income of up to 40 thousand reais.

Sabino also decided to keep the end of the Interest on Equity (JCP), a mechanism that large companies use to remunerate shareholders, deducting the expense from the tax.

The leader of the government in the Chamber, Ricardo Barros (PP-PR), told the deputies that the government has pledged not to veto, in the sanction, the provision that does away with Interest on Own Capital and the one that creates taxation on dividends. “If there is a veto for legal allegations, we will make an agreement to overturn the veto later,” he guaranteed.

The text also expands the income tax exemption range for individuals, which will go from 1,903.98 reais to 2,500 reais. Those who earn up to this amount will not need to pay income tax. This point has not changed over recent discussions.