BRASILIA, Feb 24 (Reuters) – Brazil’s federal tax revenue rose 3.56% in real terms in January from a year earlier to 325.8 billion reais ($62.87 billion), the highest figure for the month on record, the tax revenue service said on Tuesday.
The result came in the first month of a broader income tax exemption aimed at benefiting the middle class, offset by new levies on dividends remitted abroad and on higher incomes, a key policy bet by leftist President Luiz Inacio Lula da Silva as he gears up for a re-election bid in October.
The government did not disclose a breakdown of the new 10% withholding tax on all dividends sent overseas, nor the same 10% withholding tax on dividends above 50,000 reais received by individuals from a single company within Brazil.
To offset the broader income tax exemption for the middle class – now covering monthly income of up to 5,000 reais, or just over three times the minimum wage – the government also introduced a minimum tax on annual income above 600,000 reais, with a progressive rate of up to 10%.
However, that minimum tax will only be assessed in next year’s income tax filings, based on income earned this year, when taxpayers will settle any difference with the tax authority if they have paid below the applicable minimum rate under the new rules.
The tax revenue service highlighted a 32.56% surge in income tax on capital income to 14.7 billion reais in January, which the government attributed to higher collections on fixed-income securities and investment funds, as well as on a popular form of shareholder compensation in Brazil known as interest on equity (JCP).
The JCP tax rate was raised to 17.5% from 15% starting in January, as part of fiscal measures approved by Lula to increase revenues and try to balance public accounts amid surging social expenses.
($1 = 5.1819 reais)
(Reporting by Marcela Ayres)
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