Brazil: Lula wants to tax up to 500 companies with ‘superprofits’

On Thursday (6), Fernando Haddad, Minister of Finance of the Lula government, announced that the government is considering taxing up to 500 companies that may be using deception to avoid paying taxes.

According to the minister, these companies would present “superprofits”.

About the government measures, Haddad said:

“We are talking about big companies that have superprofits.”

“From 400 to 500 [companies] with superprofits, that, with illegitimate expedients, have included in the tax system what is indefensible, such as subsidizing the cost of a company making a profit.”

“If a company is making a profit, why is the government going to put money into subsidizing that company?

With “subsidize the cost”, the minister refers to the tax incentives granted by the states to companies via ICMS, which, on the calculation basis of federal taxes, can deduct this credit.

The federal government’s objective is to ensure that the credit is only deducted if it is used for investments and not for funding.

Haddad also said that the fiscal framework of Lula’s government (the new rule for public accounts) will necessarily lead to a drop in the basic interest rate, which today is 13.75%.

Haddad also said that companies that pay few taxes cause “distortions in the economy” and put pressure on public finances, this being one of the reasons for the increase in the Selic rate.

With the measure – which still needs to be approved by Congress – the government hopes to raise up to R$90 billion (US$17.8 billion).

Finally, Haddad said that the proposal would not affect small businesses.

With information from Revista Oeste