Brazil starts taxing the super-rich. Brazilian President Luiz Inácio Lula da Silva approved a provisional decree to tax exclusive funds, termed “super-rich funds”.
This includes a 15-20% tax on income of exclusive funds, those with one shareholder.
It’s estimated that 2,500 Brazilians have investments in these funds, totaling 756.8 billion reals (US$151.36 billion), or 12.3% of the country’s funds.
Investors in these funds are believed to have a minimum net worth of 10 million reals (US$2 million), given the high maintenance costs, hence the term ‘super-rich funds’.
This provisional measure is immediately valid but requires Congressional approval within 120 days to remain so.
The announcement was made at the Planalto Palace, where Lula signed a law adjusting the minimum wage and expanding the income tax exemption range (IRPF).
Finance Minister Fernando Haddad defended the tax measures, dismissing any notion of “revenge” against the wealthiest.
He indicated that the goal is establishing social justice and a balanced tax system, aligning with legislation in developed capitalist countries worldwide.
The government-dubbed ‘super-rich’ text stipulates bi-annual tax collection, contrasting with the current practice of collecting tax only at redemption.
Opting to pay tax in 2023 incurs a 10% rate. It’s expected this will raise 24 billion reals (US$4.8 billion) from 2023-2026.
Additionally, the federal government plans to send a bill taxing income held abroad via trusts and offshores.
This tax is intended to offset the tax waiver accompanying the IRPF table correction, which increased the contribution floor.