Brazil Considers Income Tax Reform: Increased Exemption and Minimum Tax for High Earners

Brazil's Ministry of Finance is considering an income tax (IR) reform to expand the tax exemption range to those earning up to R$ 5,000. This was announced by Executive Secretary of the Ministry of Finance, Dario Durigan, at the Plano de Voo event of the American Chamber of Commerce for Brazil (Amcham). In contrast to the expanded exemption, the proposal includes a minimum tax of up to 10% on the wealthiest segment of the population. According to Durigan, "The exemption that goes up to R$ 5,000 includes 10 million more Brazilians, with the counterpart of taxing a minimum tax of 10% on the richest. [This group] involves a universe of 160,000 people who today have an average income tax contribution much lower than what a common worker pays." Durigan reiterated that the reform will consider what is already paid by the legal entity so that "the correct company" is not excessively burdened, while those with taxation far below the average should be charged. The Executive Secretary of Finance also stated that the reform will promote a reduction in transaction costs, a reduction in fiscal warfare, combating tax evasion, and transparency.