International Tax Newsletter - Março 2024

Gerentes da empresa discutindo a solução. Empresários se reunindo na sala de reuniões, assistindo conteúdo no monitor do computador juntos.

Brazilian Individual Income Tax Return 2024: submission period is officially open and Tax Authorities have already received 2.2 million 2024 Income Tax Returns 

The long-awaited period for submitting Individual Income Tax Return (IRPF) 2024 is now open, starting Friday, March the 15th and ending scheduled for May 31st.

This year, Tax Authorities expects to receive 43 million IRPF that fall under this year's requirement.

It is worth remembering that in 2024 the taxable income limit changed, going from R$28,559 to R$30,639 for the year. The exemption limit for possession of goods and rights also increased from R$300,000 to R$800,000.

The Tax Authorities revealed that, until 4pm of March 17th, 2.24 million returns had been submitted, equivalent to approximately 5.23% of the total expected for this year, estimated at 43 million.

The deadline for sending declarations began at 8am on Friday, the 15th and runs until 11:59:59pm on May 31st. The deadline extension that started during the pandemic is now being formalized and is expected to become regular. The authorities aim to facilitate the filing by expanding the possibility of the pre-filed return to more citizens. This version is now available and includes automatic filing of earnings reports submitted by employers, health plans and financial institutions.

Published Normative Instruction No. 2,180/24, which regulates Law No. 14,754/23 (taxation of assets abroad)

Law #14,754/2023 introduced a new taxation system for foreign assets held by tax residents in the country, more specifically financial investments, controlled entities and trusts abroad.

As a result, on 03/13/24, Normative Instruction #2,180 was published providing for the regulation and clarifications to Law #14,754/23, among which we can highlight:

  • ABEX – an on-line system for updating the value of assets and rights abroad, with the base date of 12/31/2023, aiming to anticipate taxation by applying a taxation at a rate of 8%. Access to ABEX will be carried out via authentication, through the single portal, with a deadline of 05/31/2024;
  • Greater focus on virtual assets and their framing as financial investments abroad, when held or traded by institutions located outside Brazil;
  • Detail of the applicable procedures regarding the information to be presented in the annual Individual Income Tax Return, in relation to the results of controlled entities and trusts abroad.

Municipality of SP regulates ISS calculation basis on sports bettingUpdate of the Income Tax table changes profit distribution rules

The Normative Opinion of the Municipal Finance Department SF #1/2024 was published, on March 18th, 2024, in the Official Gazette of the Municipality of São Paulo. The novelty regulates the calculation basis of the Service Tax (ISS) levied on the provision of sports betting services.

Law #13,756/2018, amended by Law #14,790/2023, sanctioned in December 2023, regulated the “fixed odds” betting modality, allowing the exploitation of this modality in sporting events and online games by companies authorized by the Ministry of Finance.

Normative Opinion SF 1/2024 was published with a view to providing greater legal certainty to the betting sector regarding the ISS calculation basis to provide that this tax will apply to 88% of the proceeds from the fixed-odd betting lottery collection – after the deduction of the prize value; of the income tax levied on the prize and the 12% of the GGR with specific allocation (according to the items in § 1º-A of Art. 30 of Law nº 13,756, of December 12, 2018). This definition of the calculation basis aims to attract companies in the sector to operate in the city of São Paulo, as published in a note on the topic on the SP City Hall website.

The Normative Opinion is already in force, with express provision that it is a binding standard for all units and bodies within the structure of the São Paulo Municipal Finance Department.

Copom reduces Selic rate to 10.75% per year

The Monetary Policy Committee (Copom) reduced the economy's basic interest rate, the Selic rate, by 0.5 percentage points, reaching 10.75% per year, something already expected by financial analysts.

In a statement, the Copom reported that it should only make another reduction of 0.5 points at the next meeting, scheduled to take place in May, which increases the chance of the authority pausing the cycle of cuts from June onwards.

It is worth highlighting that the rate is at its lowest level since March 2022, a time when it was also at 10.75% per year. Furthermore, before the start of the rising cycle, the Selic had been reduced to 2% per year, at the lowest level in the historical series that began in 1986, but due to the Covid-19 pandemic, the BC ended up reducing the rate. to stimulate production and consumption.

The Selic rate reduction is intended to stimulate the economy, given that lower interest rates make credit cheaper and end up encouraging production and consumption.

According to an estimate published, economic analysts predict a 1.8% expansion of the Gross Domestic Product (GDP) in 2023. Furthermore, it is important to highlight that the basic interest rate is used in public bond negotiations at Selic and serves as a reference for other interest rates in the economy.

By reducing basic interest rates, as defined by the Copom, it makes production and consumption cheaper and encourages production, but weakens inflation control.

Brazilian Tax Authorities publishes Notice to join the Zero Litigation Program 2024

The Taz Authorities announced on March 19th the launch of Litigation Zero 2024 through Adhesion Transaction Notice #1/2024. The Notice aims to facilitate the transaction by adhesion of tax credits that are in administrative litigation.

Individuals and companies that have tax disputes with the Tax Authorities, limited to R$50 million, can join the program, as long as they comply with the requirements established in the Notice.

The transaction offers the opportunity for installments and discounts for credits considered difficult to recover or irrecoverable, respecting the recommended maximum limits. For tax credits classified as high or medium recovery prospects, there is no forecast for reduction and payment of these debts may occur in two ways:

  • Payment of at least 30% of the consolidated value of the transacted debt, in up to five installments, and the remainder of the outstanding balance using tax loss credits and negative CSLL calculation basis, calculated until December 31, 2023, limited 70% of the debt after entry, and the residual balance divided into up to 36 installments; 
  • Down payment of 30% of the consolidated value of the debt, in up to five installments, and the remainder in up to 115 installments.

The adhesion can be carried out through the Virtual Service Center Portal (e-Cac), in the "Legislation and Process" tab, using the "Web Applications" service, in the period between April 1st and July 31st, 2024