IR: Opinion provides for taxation of 5.88% on fund profits and dividends


The rapporteur of income tax reform, deputy Celso Sabino (PSDB-PA), inserted in his opinion the forecast that the profits and dividends received by investment funds will be taxed on 5,88%, instead of the 20% that will be charged when the recipient is an individual.

At a press conference, Sabino said that the measure was widely negotiated with the Brazilian Association of Financial and Capital Market Entities (Anbima).

The text says that “profits or dividends paid as a result of securities that are part of investment fund portfolios” will have a 5.88% withholding income tax, regardless of the investment fund’s classification.

The income tax paid will be considered final and cannot be refunded or compensated by the fund manager.

Also according to the substitute, the amount received by the fund, net of income tax, will be incorporated into the equity value of the shares. The shareholders, in turn, will be subject to the taxation provided for the fund, either at the time of redemption or in the “come-cotas”, according to the classification of the fund.

In the proposal, the taxation of open, closed and exclusive funds is foreseen at 15%. Today, rates range from 15% to 22%.

The government had originally proposed that real estate funds should pay income tax, but the rapporteur maintained the current exemption after the measure generated strong resistance.

Sabino also said that pension funds will not be taxed on profits and dividends received, as will the affiliates.

Simplified declaration limit follows; those who receive up to R$3.1 thousand are exempt

Deputy Celso Sabino (PSDB-PA), rapporteur of the Income Tax reform, countered the criticism that the limitation of the simplified discount in the declaration of the Income Tax of Individuals (IRPF) to those who earn up to R$ 40 thousand per year will harm the middle class and said the change is kept in their opinion.

According to him, with the correction of the IRPF table and the possibility of simplified use, in practice, those who receive up to R$3.1 thousand per month will be exempt from tax.

The exemption range should increase from the current R$1.9 thousand to R$25,000, according to the proposal, but the possibility of a simplified discount for those earning up to R$3.3 thousand will make more people able to access the exemption , said the rapporteur.

In the simplified discount, a 20% deduction is applied to the declared income in order to obtain what will be the tax calculation basis.

Among those who earn from R$3.3 thousand to R$6.4 thousand monthly, even without the possibility of a simplified discount, Sabino said that the declaration of contributions to the INSS (which are one of the legal deductions in the IRPF) will already be able to reduce the tax burden in relation to what is currently paid by the taxpayer.

The rapporteur also said that he included in the proposal the extension, for another five years, of three tax benefits that are about to expire, such as for children and adolescents and for taxpayers with cancer.

Interest on Equity

Sabino decided to propose the extinction of the Interest on Own Capital (JCP), an instrument used by publicly traded companies (with shares on the stock exchange) to distribute profits to their shareholders, among other changes.

In the original proposal, the government had already indicated the end of the deductibility of JCP on Income Tax. Now Sabino has decided to put an end to the instrument. “We are removing this jabuticaba from our legal system,” he said.

At the press conference to present the most recent changes to the opinion, on Tuesday, 2nd, the deputy assured that 100% of companies will have a reduction in the tax burden, as the end of the JCP and the taxation of profits and dividends are being offset by the reduction 12.5 percentage points in the Corporate Income Tax (IRPJ) – of which 7.5 points are immediate and 5 points depend on the achievement of collection goals.

Sabino acknowledged that “there are some exceptions” of large recipients of profits and dividends (in amounts of R$500,000, R$200,000, he exemplified), for whom the tax burden charged today, considered very low, may rise.

After presenting the opinion, the rapporteur said that the voting date depends on a decision by the president of the Chamber, Arthur Lira (Progressistas-AL).

Change in CFEM will yield more than R$ 1 billion for Pará alone, says rapporteur

The rapporteur for the reform of the Income Tax, deputy Celso Sabino (PSDB-PA), predicted an increase of R$ 1.6 billion in the collection of Pará. Sabino is a deputy from Pará, where he acted as fiscal auditor. He informed this Tuesday, 3, that he will propose an increase from 4% to 5.5% in the CFEM rate, financial compensation for the exploration of mineral resources.

The opinion will also propose that all CFEM collection be for states and municipalities. Today 10% stay with the Union and the rest is divided among the other entities.

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