Corporate Tax

Brazil will vote on tax reform subsequent week

BRASILIA (Reuters) – Brazil’s lower house of Congress is expected to vote on tax reform next week, with the bill likely to be amended to exclude income and dividend taxes on certain small businesses, senior lawmakers who led the process said Wednesday.

The vote on the stage of the bill to simplify and cut personal taxes, income taxes and levies on corporate profits will take place when Congress returns from hiatus next week, spokesman Arthur Lira told GloboNews.

In Brasilia, Deputy Celso Sabino, the sponsor of the bill in the House of Commons, said small businesses registered with the “Simples” tax regime are likely to be exempt from paying taxes on profits and dividends.

He added that there was a “strong possibility” that the 20,000 reais ($ 3,883) monthly threshold above which companies must pay a 20% dividend tax could be lowered. The Ministry of Economic Affairs only proposed this threshold and rate last month.

But Sabino diverged from earlier statements by the economy ministry by saying that corporate income tax could drop sharply to 2.5%, which he believed would put around 100 billion reais into the economy.

Economy Minister Paulo Guedes said earlier this month that the tax on corporate profits could be cut by five to ten percentage points. Brazil’s corporate tax rate is currently 15%, with profits in excess of 20,000 reais per month ($ 4,000) being taxed at an additional 10% rate.

Sabino said he will meet with representatives of the city’s mayors and state governors in the coming days to discuss the proposals and include “triggers” in the bill to ensure local authorities do not lose money from the reforms suffer.

“We are about to have a text ready for voting,” said Sabino after a meeting with Guedes.

Last month, the Brazilian government tabled proposals to cut income tax for up to 30 million workers, cut corporate profits tax and increase taxes on financial market profits. Brazil’s tax system is considered to be one of the most complex in the world.

Reporting by Lisandra Paraguassu, Isabel Versiani and Ricardo BritoWriting by Ana Mano and Jamie McGeeverEditing by Jonathan Oatis and Marguerita Choy

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