Brazil’s tax reform plans to reduce taxes for industry, says minister

The tax reform planned by the government of Brazilian President Luiz Inácio Lula da Silva foresees a tax reduction for the industrial sector, announced yesterday, Tuesday, by the Minister of Economy, Fernando Haddad.

“Our idea of tax reform foresees the reduction of taxes for the industry”, Haddad assured journalists after meeting with the Brazilian Federation of Banks (Febraban) in São Paulo to discuss the tax reform.

Brazil, Latin America’s leading economy, has the most significant industrial park in Latin America, concentrated in the state of São Paulo (southeast).

President Lula has said that one of his objectives in 2023 is to work to pass in Congress a tax reform that would raise the salary exempt from paying income tax from the current R$1,903.98 (about US$373) to R$5,000 (about US$985.5).

Haddad maintained that there is “concern” in the government about a possible reduction in the supply of bank credit for individuals and companies, given that the basic interest rate set by the central bank is at 13.75 percent per annum.

He explained that they are discussing how to improve the banking competition environment and reduce the “spread”, that is, the difference between the deposit rate banks pay and the rate they charge on their loans.

When credit is expensive, the minister argued, economic activity becomes difficult as profit is lower than interest.

The meeting with Febraban was also attended by the Ministers of Planning, Simone Tebet, and of Management, Esther Dweck; the Minister of Agriculture, Carlos Fávaro; and the President of the state-owned development entity Banco Nacional de Desenvolvimento Econômico e Social, Aloizio Mercadante.

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