Originally published in the May 2 edition of World Tax Daily (Copyrights Tax Analysts – www.taxanalysts.com)
Brazil’s House of Representatives on April 29 approved Provisional Measure 413 (published January 3), which increases from 9 percent to 15 percent the social contribution on net income (CSL) for financial institutions and introduces other tax provisions.
The provisional measure also introduces tax provisions applicable to the tourism and ethanol sectors and to taxpayers in general. Those provisions deal mostly with COFINS (Contribution for the Financing of Social Security) and P.I.S. (Program for Social Integration contribution).
Regarding ethanol, the original version of Provisional Measure 413 tried to minimize tax evasion by establishing higher P.I.S. (3.75 percent) and COFINS (17.25 percent) rates for ethanol producers and importers. The higher rates at origin were offset by zero rate P.I.S. and COFINS for the remainder of the chain of distribution. The House of Representatives revised the measure, splitting the responsibility for P.I.S. and COFINS collection between ethanol producers and distributors.
The provisional measure also includes personal income tax exemption for thalidomide victims, CSL tax reduction for laboratories, extension of the federal excise tax exemption of press paper, and P.I.S. and COFINS taxation on some beverages.
The measure will now go to the Senate.
David Roberto R. Soares da Silva