Brazil's fiscal package to include higher tax on interest on equity
BRASILIA, June 10 (Reuters) - Brazil's Finance Minister Fernando Haddad said on Tuesday that the government's new fiscal package includes an increase in the income tax rate levied on so-called interest on equity (JCP) payments to 20% from 15%.
JCP is a form of shareholder remuneration that allows companies to deduct such payments from their corporate tax base.
Speaking to reporters, Haddad said that the decision to include the measure - previously proposed by the government but not voted on by Congress - came at the request of lawmakers.
Haddad also confirmed that the fiscal package includes the unification of income tax rates on financial investments at 17.5%, replacing the current sliding scale of 15% to 22.5%, which varies according to the investment's holding period.
The new rate would apply to all investments, including stocks and bonds, except those currently exempt from income levy, which would begin to be taxed at 5%, as Haddad had already disclosed on Sunday.
The minister, who spoke after returning from a meeting with President Luiz Inacio Lula da Silva, said the additional revenue generated by the package would be used primarily to revise the previously imposed financial operation tax (IOF) hike on forfait operations.
The IOF decree, which had been introduced to boost public revenues and also raised the tax on private pension funds and some credit and foreign exchange transactions, triggered strong pushback from both Congress and market players, prompting the government to seek an alternative path as lawmakers threatened to overturn the measure.
Haddad defended the new fiscal measures on Tuesday, arguing that they are likely to support the strengthening of the Brazilian currency, pave the way for interest rate cuts, and help ensure compliance with this year's and 2026 fiscal targets.
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