Brazil’s Finance Ministry has revealed its plans to propose new tax measures to Congress as part of the 2025 budget bill. These measures include imposing taxes on big tech companies, implementing a global minimum tax on multinational corporations, and making changes to certain income taxes to secure the fiscal goals for the upcoming year.
One of the key proposals in the 2025 budget bill is the implementation of a global minimum tax of 15% on multinational corporations. This aligns with Brazil’s role as the chair of the G20 forum, where discussions on global tax cooperation have been ongoing. The aim is to ensure that companies pay their fair share of taxes, especially in the digital economy where big tech companies often operate across borders and minimize their tax liabilities.
In addition to the global minimum tax, the Finance Ministry also plans to tax big tech companies, which have been under scrutiny for their tax practices. These companies generate significant revenue in Brazil, but often pay minimal taxes due to loopholes and inconsistencies in the current tax system. By imposing taxes on these companies, the government aims to increase its revenue and address the disparities in the tax treatment of digital and traditional businesses.
As part of the proposed measures, the government plans to increase certain income taxes to generate additional revenue. This includes changes to the social contribution tax on corporate income (CSLL) and interest on equity payments (JCP). These changes are expected to contribute to the overall tax revenue target set for 2025.
The Finance Ministry is also counting on the end of tax waivers on payrolls for companies in certain sectors and smaller municipalities to boost its revenue. While the government has faced challenges in eliminating these tax advantages in the past, it is hopeful that the proposed changes will be approved by Congress.
Another significant source of revenue outlined in the 2025 budget bill is a new dispute resolution program for large taxpayers. This program, to be launched in 2025, is expected to generate substantial settlements from companies that have tax disputes with the government. The ministry estimates that these settlements could amount to 30 billion reais, contributing to the overall revenue target for the year.
Furthermore, the Brazil’s Federal Administrative Council of Tax Appeals (CARF) is projected to provide additional revenue through its rulings on taxpayer administrative cases. The ministry anticipates raising 28.5 billion reais through these rulings, further bolstering its revenue projections for 2025.
Despite the proposed tax measures, economists remain skeptical of the government’s fiscal efforts. Many believe that the approval of certain tax increase measures included in the budget bill is unlikely, and others may face opposition or be frustrated in implementation. This skepticism is reflected in projections of a deficit in 2025, with estimates suggesting a deficit of 110 billion reais or 0.9% of GDP.
Overall, the proposed tax measures in Brazil’s 2025 budget bill reflect the government’s efforts to increase revenue, address tax distortions, and ensure fiscal sustainability. However, the challenges of securing approval for these measures and meeting the fiscal targets remain significant, highlighting the complexity of tax policy and administration in a rapidly evolving economic landscape.