Chamber approves project to tax exclusive and offshore funds, which goes to the Senate By Reuters

2023-10-26 03:35:43

© Reuters. Plenary of the Chamber of Deputies 12/20/2022 REUTERS/Adriano Machado

By Maria Carolina Marcello

BRASILIA (Reuters) – The plenary of the Chamber of Deputies approved this Wednesday the bill that deals with the taxation of exclusive and offshore funds, a measure closely monitored by the government, which has embarked on an effort to meet its fiscal target in 2024.

The approval of the project occurs on the same day that President Luiz Inácio Lula da Silva decided to replace the president of Caixa Econômica Federal with the economist Carlos Antônio Vieira Fernandes, appointed by the centrão — a political group that includes the president of the Chamber, Arthur Lira (PP -AL), as one of its main leaders.

By 323 votes to 119, deputies approved the main text, and, after quickly voting on highlighted amendments, concluded the analysis of the text, which now goes to the Senate.

Authored by deputy Pedro Paulo (PSD-RJ), rapporteur of the matter, the text — which replaces the original project — deals with the taxation of investments in investment funds in the country and the income of individuals residing in Brazil in financial investments , controlled entities and trusts abroad.

Pedro Paulo’s report provides that individuals residing in Brazil must declare in the Annual Adjustment Declaration (DAA), separately from other income and capital gains, the income from capital invested abroad, in the form of financial investments and of profits and dividends from controlled entities. According to the text, a rate of 15% will be applied to the annual portion of income.

According to the text, financial investments are considered to be interest-bearing bank deposits, virtual assets, digital wallets or current accounts with income, investment fund shares — with the exception of those treated as entities controlled abroad — financial instruments, and investment certificates or operations capitalization funds, in addition to retirement or pension funds, fixed income and variable income securities, credit operations, among others.

Pedro Paulo’s substitute provides, as a general rule, for the incidence of a 15% rate on income from investments in investment funds with Income Tax withholding at source.

In the option of bringing forward the incidence of tax on income from 2023 on closed-end funds and updating assets abroad at market value on December 31, 2023, the rapporteur decided on a rate of 8%. Previously, Pedro Paulo had defended a 6% rate for this purpose, compared to the 10% proposed by the government.

In a statement, the Agricultural Parliamentary Front (FPA) considered the conditions related to Investment Funds in Agroindustrial Production Chains (Fiagro) and Real Estate Investment Funds (FIIs) positive.

According to the parliamentary group, the bench’s negotiations with the rapporteur ensured “that the Fiagros and FIIs have at least 100 shareholders”. According to the FPA, 50 participants were previously required.