Summary of Changes to the Income Tax (IR) Proposal:
Here’s a breakdown of the key changes made to the income tax proposal by rapporteur Lira,based on the provided text:
Dividend Taxation:
* 2025 Dividends: Dividends cleared in 2025 will not be taxed at 10%. This was a pre-existing forecast, now solidified without requiring shareholder approval by year-end.
* 2026 & Beyond: For distributions from 2026, taxation on old profit balances will be proportional.
* Domestic Dividends (from 2026): A 10% retention will apply to dividends over R,000 distributed to individual residents in Brazil.
* Dividends Sent Abroad: A 10% rate will apply to all amounts of dividends sent abroad, including those to legal entities.
Effective Minimum Tax:
* Profits and dividends calculated by 2025 and paid by 2028 will be excluded from the calculation base of the effective minimum tax.
* The effective minimum tax will be charged to those earning over R$50,000 per month (R$600,000 per year), reaching 10% for those with income over R$1.2 million.
Other Key Points:
* Lira made “four or five simple and accurate changes” to increase transparency and guarantee alignment with decisions made by the special commission.These changes were agreed upon with the IRS and the economic team.
* The rapporteur will propose a bill to Congress within a year for a national policy of updating the IR table.
* Amendments to index the IR table to inflation (IPCA) were rejected.
Link to Further Reading: