Lira excludes LCI, LCA, and CRI from the calculation of the minimum tax for high incomes.

247 - The report by Congressman Arthur Lira (PP-AL) approved this Wednesday (16) in the special committee that discusses changes to Income Tax removed from the calculation base of the so-called “minimum tax” the income obtained from various tax-exempt securities, such as LCI, LCA, CRI and CRA. The proposal, which will now go to a vote in the plenary of the Chamber of Deputies after the July recess, modifies key points of the version originally sent by the Lula government (PT).

According to Folha de S. PaulLira's text expands the exceptions provided for in the calculation of the new tax, which will apply to taxpayers with an annual income exceeding R$ 600 — the equivalent of R$ 50 per month. The rate is progressive and can reach 10% for those exceeding R$ 1,2 million per year.

According to the Executive's proposal, income that was previously exempt would be considered in calculating the effective tax rate, with only three exceptions: inheritances (including advance donations), capital gains, and amounts received cumulatively, such as those from lawsuits. However, Lira's opinion excludes from the new calculation base all instruments that are currently exempt, such as Agribusiness Credit Notes (LCA) and Real Estate Credit Notes (LCI), Real Estate Receivables Certificates (CRI) and Agribusiness Receivables Certificates (CRA), as well as CDAs, WAs, CDCAs, CPRs, debentures, and Guaranteed Real Estate Notes (LIG).

"It would be very difficult for the argument that income that does not form part of the minimum tax base should be taken into account when defining the respective tax rate to prosper in the Judiciary," wrote the former Speaker of the House in the report.

Lira also included in the list of exceptions savings income, compensation, pensions, and retirement benefits due to work-related accidents or serious illnesses.

Furthermore, the text maintained the pillars of the government's proposal: income tax exemption for those earning up to R$ 5, a tax reduction bracket for incomes up to R$ 7.350 (higher than the originally proposed R$ 7), the creation of an effective minimum tax, and the taxation of dividends. Profits distributed by companies, when exceeding R$ 50 per month, will be taxed at 10%, including when sent abroad, with the right to a tax credit.

In June, the government sent a provisional measure to Congress to tax investments currently exempt at 5%, starting January 1st. However, the proposal is still under review by a joint committee and remains unchanged.

According to the Ministry of Finance, the creation of the minimum tax aims to correct distortions, since the wealthiest Brazilians pay, on average, only 2,5% of their income in income tax, while ordinary workers pay between 9% and 11%. According to data from the Federal Revenue Service, police officers pay an average effective tax rate of 9,8%, and teachers 9,6%.

In his final opinion, Lira also reinstated the 34% tax reduction for high-income taxpayers, which had been removed from his previous report. According to the congressman, the absence of this reduction could excessively increase the tax burden, leading to a nominal rate close to 40,6%.