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The new “tax on the super-rich” is driving revenue in Brazil to historic levels.

The new “tax on the super-rich” is driving revenue in Brazil to historic levels.

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January was the first month recorded since the new law came into effect. Data was reported today, Friday 23th. The initiative approved in December is key to the Finance Minister’s goal of ending the year with a zero deficit.

Federal tax collection in Brazil reached 280.6 billion reais (about US$56.5 billion) in January, marking a real increase of 6.6% compared to the same month last year. The data was released by Brazil’s Federal Revenue Agency (RFB) and represents a record, marking the best month in the entire historical series that began in 1995.

The so-called “tax on the super-rich” in Brazil stands out among the highlights of the January report. This was the first month recorded since the new law on offshore and exclusive funds for investments abroad came into effect, an initiative considered crucial by Finance Minister Fernando Haddad to achieve the zero deficit goal for the year. According to the latest figures, the Federal Treasury collected 4.1 billion reais (US$825 million) through this concept. This unprecedented amount in the balance sheet boosted the performance of tax collection with capital gains.

Without inflation correction, revenues increased by 11.48% in January.

In November, the Brazilian Congress approved the bill on offshore companies and exclusive funds, and President Luiz Inácio Lula da Silva signed the law in December. Tax authorities are still analyzing the entry of income resulting from the taxation of extraterritorial funds.

After modifying the taxation of funds intended for the super-rich and restricting the issuance of tax-exempt bonds, the economic team also prohibited the creation of new exclusive pension funds this week, which had been used as an “escape route” for high-net-worth investors

The aim is to curb tax planning for the wealthiest segment of the population and correct what the government considers distortions in the financial market.

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ABOUT THE AUTHOR See More
micillogabriel@gmail.com
Gabriel Micillo
Gabriel is a certified public accountant graduated from UNNE (National University of the Northeast, Argentina) and a software developer, currently pursuing a Master's degree in Finance and Economics. With nearly 8 years of experience working for accounting firms and brokerage firms. Concurrently, he has produced economic and financial reports on the current state of regional economies for the clients of the establishments where he has worked. Additionally, he assisted colleagues like Ignacio Teson in the drafting and editing of articles on similar topics in English language.
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