Bolsonaro aims to set income tax to Zero for foreigners investing in Brazil

A provisional measure issued by President Jair Bolsonaro reduces the income tax of foreigners who have invested in Brazil to zero.

The matter was published in the Official Gazette of the Union on Thursday (22) and will now be considered by Congress.

The law amends Law 11,312 of 2006, under which the tax rate reduction applies to income earned between Jan. 1, 2023, and Dec. 31, 2027.

The benefit may be extended to residents or domiciled abroad who are shareholders of infrastructure investment funds (FIP-IE) and investment participation in economic productions with intensive research, development, and innovation.

The zero tax rate also applies to Sovereign Walth Funds, even if they are located in countries with preferential taxation.

The temporary measure classifies as sovereign wealth funds the investment vehicles abroad whose assets are composed exclusively of funds from the government savings of the respective country.

The measure sets the income tax rate at zero for a range of income received by foreign residents.

The provision applies to securities distributed to the public and issued by private legal entities that are not classified as financial institutions, as well as to credit rights investment funds supervised by the Brazilian Securities and Exchange Commission (CVM) and whose originator or guarantor is not a financial institution.

Taxpayers that carry out financial transactions in Brazil may claim the exemption under the rules and conditions established by the National Monetary Council.

The quotas of investment funds that invest exclusively and in any proportion in securities, in assets that give rise to tax-exempt income, in federal public securities and repurchase agreements collateralized by federal public securities, or quotas of investment funds that invest in federal public securities, may also be exempt from income tax.

Source: Senate Office

For the full picture, see our Brazil Tax Reform: Complete Guide.

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