Federal tax revenue in Brazil grows 1.41% and sets a record in November

RIO DE JANEIRO, BRAZIL – Driven by the economic recovery and extra tax revenues linked to corporate profits, the federal tax collection hit a record high for the month of November.

According to data released today (21) by the Federal Revenue Service, the government collected R$157.34 (US$27.3) billion last month, with an increase of 1.41% above inflation in values corrected by the National Wide Consumer Price Index (IPCA).

The amount is the highest in history for the month of November since the beginning of the historical series of the Federal Revenue Service in 1995, in inflation-adjusted values.

From January to November, federal tax collections totaled R$1.685 trillion (US$293 billion), up 18.13% above inflation as measured by the IPCA, also a record for the period.

The collection exceeded the forecasts of financial institutions. In the Fiscal Prism report, a survey released by the Ministry of the Economy, market analysts estimated that the amount collected would be R$151.513 billion in November, based on the median criteria (the central value around which a data point oscillates).

The recovery of the economy, which this year should close with a growth of around 4.5%, is driving tax collections, with an increase of R$ 3.69 billion in November compared to November last year, in IPCA-adjusted values. However, atypical factors and changes in legislation also contributed to the increase.

UNUSUAL COLLECTIONS

The November collection was also boosted by atypical tax collections (which will not be repeated in other years) of about R$3 billion in November in Corporate Income Tax (IRPJ) and in Social Contribution on Net Income (CSLL) by large companies.

From January to November, atypical collections totaled R$ 39 billion, compared to only R$6.5 billion in the same period in 2020.

Throughout 2021, these out-of-season collections have boosted collections because of companies that recorded higher-than-expected profits and had to pay the difference.

Because of tax secrecy, the IRS cannot give the name and activity of these large companies. Tax offsets, when a taxpayer asks for a rebate or discount on taxes payable, fell by R$5.33 billion in November, boosting tax collection.

The increase in the IOF tax, which went into effect at the end of November to finance Auxílio Brasil, also helped improve collections. The weak base of comparison in IOF revenues in 2020 also helped.

From April to December of last year, the IOF tax on credit operations was zeroed to cheapen the emergency lines of credit granted during the pandemic.

Together, the two effects – increased IOF and a weak comparison base last year – raised tax collection by R$710 million last month compared to November 2020.

TAXES
In the breakdown by taxes, the highest increases in November – compared to the same month in 2020 – were recorded in the IOF tax collection, up R$3.75 billion (+322.65%) over inflation according to the IPCA.

Next come the IRPJ and CSLL, with growth of R$2.73 billion (+12.12%) above inflation, driven by the atypical collection of large companies and the increase in corporate profits.

In third place are the revenues from Withholding Income Tax on capital operations, up R$1.06 billion (+34.52%) above inflation. However, other indicators that were growing throughout 2021 started to register a drop in the final quarter of the year.

The Social Security collection, which reflects formal employment, fell 6.42% discounting inflation by the IPCA in November compared to the same month in 2020.

Influenced by the slowdown in sales and the service sector, the collection of the Social Integration Program (PIS) and the Contribution to Finance Social Security (Cofins) fell 11.10%, also discounting inflation. Because they are levied on sales, the PIS and Cofins are linked to consumption.

With information from Agencia Brasil