THE Chamber of Deputies completed this thursday the income tax reform vote (PL 2337/21). The text, which now goes to the Senate, establishes a series of changes for individuals and also for legal entities. If approved, the changes take effect as of January 1, 2022.
The text increases exemption from personal income tax from BRL 1,903.98 per month (amount that has not been corrected since 2015) to BRL 2,500 per month, an increase of 31%, and corrects by about 13% the amounts covered by the other rates of 7.5%, 15 %, 22.5% and 27.5%.
The text maintained the possibility for all taxpayers to opt for the simplified discount, but reduced the value of this discount. The standard discount limit of 20% of annual taxable income drops from R$16,754.34 to R$10,563.60.
Those who receive less than BRL 6,980 per month pay less income tax, says lawyer
According to the calculations of the lawyer specializing in Tax Law Elisabeth Lewandovski Libertuci, this correction benefits those who earn up to R$ 6,980 per month. “Those who receive up to this amount can be sure that they will actually pay less tax,” he says.
For those who earn above this amount of BRL 6,980, the reduction of the simplified discount removes the benefit of the correction in the Income tax so that, in practice, the taxpayer collects less tax during the year, but when making the annual tax adjustment declaration, he has a lower tax refund or more tax to pay, he explains. “The government gave up borrowing money from the individual in 2022. That’s the summary.”
Correction of the table is far from ideal
For Tathiane Piscitelli, professor of Tax Law at FGV Direito SP, the correction of the IR table is “better than nothing, but it is far from ideal”, since the President Jair Bolsonaro’s initial promise as a candidate was that the exemption would be for those earning up to five minimum wages (in current values, the equivalent of R$ 5,500).
“Since 2015 the table had no correction, people were paying more tax for a long time.”
Another point that deserves criticism in the professor’s opinion is the unequal taxation of profits and dividends. The proposal taxes companies’ profits and dividends at 15%, but exempts companies from Simples and the presumed profit regime that earn up to R$ 4.8 million.
“This encourages fiscal stunting, as companies do not have the incentive to grow, because they will have to pay taxes based on certain revenues.”
The ideal, according to the teacher, is that there would be no total exemption, but a gradual taxation so that the message that it is better to be small in order not to pay tax would not remain.
fights in sight
For tax lawyer Fábio Nieves and former vice president of the taxpayer defense council of the State of São Paulo, the issue of profits and dividends brings another problem: the tendency to increase legal disputes and administrative litigation between the inspection of the Tax on Income and businesses.
“The partner can receive in cash or in benefits. But if the company decides to pay a partner in benefits such as a car from this reform, the inspector may think that it is a disguised distribution of profit so as not to pay tax. This becomes a car of infraction, and if the company does not agree, it goes to court”.
“The way it is, the reform is very bad, a real “puxadinho”.
Check out the main changes in the renovation project as it stands so far:
IR for individuals:
• Progressive table:
Exemption limit – Changes from R$1,903.98 to R$2,500
Range taxed at the rate of 7.5% – Changes from BRL 1903.99 to BRL 2,500.01
Range taxed at the rate of 15% – Changes from BRL 2,826.66 to BRL 3,200.01
Range taxed at the rate of 22.5% – Changes from BRL 3,751.06 to BRL 4,250.01
Range taxed at the rate of 27.5% – Changes from BRL 4,664.68 to BRL 5,300.01
• Deduction for dependents and education
Continues with the same current values.
• Simplified Income Tax Return
Currently, the discount is 20% of taxable income, limited to R$16,754.34, and replaces all allowed deductions, such as expenses with health, education and dependents.
According to the initial proposal, this discount would only be possible for those who earn up to R$ 40 thousand per year, limited to R$ 8 thousand (20%). The approved text increases the limit to R$ 10,563.60 and maintains the possibility of using the discount by all taxpayers.
IR for companies:
• Income Tax for Legal Entities goes from 15% to 8% (previous proposal was from 15% to 6.5%);
• Extinguishes interest on equity;
• Profits and dividends: now tax company profits and dividends at 15%. The exemption is only maintained for Simples and presumed profit companies that earn up to R$ 4.8 million;
• Social Contribution on Net Income (CSLL) drops to 1% (currently 9%), subject to the end of tax benefits (Contribution to PIS/PASEP and COFINS for specific sectors);
• Unifies the tax by 15% (before the table was regressive from 22.5% to 15% depending on the application period)
• Come-cotas is no longer charged twice, in May and November, and is now charged once a year.
• Savings continue to have income tax free
• Real estate funds continue to have income exempt from income tax
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