Brazil: Report of tax developments for financial, insurance, real estate sectors

The KPMG member firm in Brazil prepared a report that describes recent tax developments that may affect companies in the financial, insurance, and real estate sectors.

The recent tax developments include:

• Provisional Measure* 1,137 (22 September 2022)—Changes to rules on taxation of financial investments held by non-resident investors and foreign sovereign funds effective 1 January 2023
  • Revocation of the “40% rule,” which prohibited application of the zero rate of income tax to any non-resident shareholder of a Fundo de Investimento em Participações (FIP) or holder of quotas who alone or with related persons held (i) 40% or more of the total shares issued or (ii) 40% of the income generated by the fund
  • Revocation of the provision that required the FIP portfolio to comprise at least 67% of shares of corporations, debentures convertible into shares and subscription bonuses
  • Reduction to zero of the income tax rate levied on income paid, credited, delivered or remitted to foreign investors arising from certain securities issued by legal entities governed by private law, certain credit rights investment funds and certain financial bills
• Provisional Measure 1,138 (22 September 2022)—Reduction in the income tax rates on amounts paid, credited, delivered or remitted to individuals or legal entities domiciled abroad, used to cover personal expenses of individuals residing in Brazil traveling abroad, whether for tourism, business, services, training or official missions effective 1 January 2023

Read an October 2022 report (Portuguese) prepared by the KPMG member firm in Brazil

_{*In Brazil, a Provisional Measure (Medida Provisória) is an “act” issued by the president, with the authority of law until later approved by Congress. The Provisional Measure is effective as from its date of publication for a 60-day period, and it may be extended for an additional 60-day period (for a total of 120 days) on a request from Congress.}