RIO DE JANEIRO, BRAZIL – Brazil’s government is weighing an immediate cut in taxes on company profits by 5 percentage points, and may double that to a 10-percentage-point reduction, Economy Minister Paulo Guedes said on Thursday.
That would signal a far more aggressive stance from the government’s tax reform bill delivered to Congress only last week, which envisages corporate profit taxes being cut 2.5 percentage points next year and again in 2023.
In an online address following the release of formal job growth figures for May, Guedes said taxes on corporate profits must be reduced, allowing companies to keep more of their own cash for wage increases, training, hiring and boosting productivity.
“We are already reassessing an immediate 5 percentage points (cut), maybe even up to 10 points,” Guedes said, adding that this would be possible if certain subsidies given to a small number of companies are eliminated.
“We are certain that we can reduce taxes by 5 percentage points, but if we have the courage to remove some of these subsidies, we can get to 10,” he said.
Brazil’s corporate profit tax rate currently stands at 15%, with profits in excess of 20,000 reais a month ($4,000) being taxed at an additional 10% rate.
Revenue Service officials last week estimated that the new corporate profit tax rates outlined in the reform bill will reduce the corporate profit tax take by 18.5 billion reais next year, 39.2 billion reais in 2023, and 41.5 billion reais in 2024.