Brazil targets banks in income tax hike bill By Reuters

BRASILIA (Reuters) – Brazil’s government submitted a bill to Congress on Friday that raises some income taxes as part of an effort to raise revenue, including a steeper increase in the bank rate.

The bill proposes changes to the tax on social contributions on corporate income (CSLL) and interest on equity payments (JCP).

Last week, Finance Minister Fernando Haddad said the two proposals would be sent to Congress to ensure compliance with budget rules, if the compensation measures presented by Congress are insufficient to offset the effects of the payroll tax breaks approved by senators.

However, he did not provide details on the size of the tax increases.

The text proposes to increase the CSLL rate for banks to 22% by the end of 2025, returning to the current level of 20% from January 2026.

The proposal for private insurance companies, capitalization firms and brokerages is to increase the CSLL rate to 16% by the end of 2025, returning to the current 15% the following year.

For other companies, the rate would rise to 10% by the end of 2025, returning to the current 9% in 2026.

As for JCP, a form of shareholder remuneration that allows companies to deduct these payments from their profit tax liabilities, the government’s proposal suggests raising the income tax rate to 20% from the current 15%.

Leftist President Luiz Inacio Lula da Silva’s government has until Friday to submit its 2025 budget proposal to Congress, which details spending and forecasts revenue to meet next year’s fiscal target of a zero primary deficit with a margin of tolerance of 0.25% of GDP on each side.

In practice, the submission of the first draft law raising the income tax in specific situations provides a legal basis for the inclusion of these projected revenues in the proposed budget bill.