Brazil’s Finance Ministry has put forward a plan to Congress that includes taxing big tech companies and implementing a global minimum tax of 15% on multinational corporations. The goal of these proposals is to secure the country’s fiscal position by 2025 in case of a revenue shortfall.
The plan outlined by the Finance Ministry aligns with global discussions on tax cooperation, particularly as Brazil currently holds the chair of the G20 forum. This indicates a commitment to international standards and practices when it comes to taxation.
In presenting the 2025 budget bill to Congress, the Finance Ministry estimated potential revenue of 17.9 billion reais from increased income taxes. Additionally, changes to the social contribution tax on corporate income and interest on equity payments were proposed, with the government relying on these revenues for next year.
While the government is banking on these tax changes to meet its fiscal targets, there are challenges ahead. The proposed end to tax waivers on payrolls for certain companies and municipalities has faced opposition. Moreover, a bill in the Senate regarding tax benefits needs approval from the Lower House, adding a layer of complexity to the situation.
The Finance Ministry estimated raising 58.5 billion reais from tax negotiations next year, including funds from a new dispute resolution program for large taxpayers. This program follows an agreement made with Petrobras, demonstrating efforts to resolve tax issues with major corporations.
Despite the proposed tax measures, experts like Rafaela Vitoria, chief economist at Inter Bank, remain skeptical. Vitoria projects a deficit in 2025, indicating that the approval of certain tax increases may face challenges. Economists surveyed by the central bank also share this skepticism, projecting a primary deficit in the coming years.
Brazil’s fiscal policy is at a critical juncture, with proposed tax changes and revenue projections shaping the country’s economic future. While there are ambitions to align with global standards and increase revenues, challenges and controversies abound. The coming years will test the government’s ability to navigate these complexities and achieve its fiscal goals.