7 September 2021
The second phase tax reform legislation introduced by the Brazilian government in June 2021 was passed in the Chamber of Deputies (lower house) of the National Congress on 1 September 2021. As previously reported, this includes the introduction of a 20% withholding tax on dividends, although intercompany dividends would be exempt. Further, although a phased-in reduction of the corporate tax (IRPJ) rate from 15% to 10% was originally proposed, a reduction to 8% was reportedly approved by the Chamber of Deputies, with the 10% surcharge maintained on taxable income exceeding BRL 240,000. A reduction in the social contribution on profits (CSLL) rate from 9% to 8% for most legal entities was also approved, while for banks the scheduled reduction of the CSLL rate to 20% from 2022 would be further reduced to 19% and the rate for other financial institutions would be reduced from 15% to 14%. The legislation now goes to the Senate (upper house) for approval and may undergo further amendment.
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