On September 22, Provisional Measure No. 692/2015 ("PM 692/2015") was published in the Official Gazette, amending certain rules on (i) the income tax payable on capital gains and (ii) the Program of Tax Litigation Reduction - PRORELIT.
PM 692/2015 established new rates to be applied on capital gains earned by individuals, as follows:
- 15% rate on the portion of the gains up to BRL 1,000,000.00;
- 20% rate on the portion of the gains from BRL 1,000,000.01 up to BRL 5,000,000.00;
- 25% rate on the portion of the gains from BRL 5,000,000.01 up to BRL 20,000,000.00;
- 30% rate on the portion of the gains above BRL 20,000,000.00.
If a given asset or right is transferred in parts, the combination of all partial transfers will be treated as a single transaction for tax calculation purposes. To that end, the capital gain will be added to the gains earned in previous transactions, and the amount of tax paid in previous transactions will be deducted. Moreover, transfers of shares of the same legal entity sold in parcels or installments will also be treated as a single transaction.
PM 692/2015 further establishes that capital gains obtained by a legal entity on the sale of fixed assets will be taxed at the rates mentioned above, except for legal entities taxed based on actual profit, presumed or arbitrated.
These new rules for capital gain taxation will become effective on January 1, 2016.
In addition, PM 692/2015 alters the Tax Litigation Reduction Program - PRORELIT as follows:
- Extension of time for joining the program until October 30, 2015;
- Reduction of the minimum payment percentage in cash (formerly 43% ) to:
- 30% of the consolidated amount of the debt for payment to be made until October, 30th of 2015;
- 33% of the consolidated amount of the debt for payment to be made in two installments, due by the last business day of the months of October and November 2015; or
- 36% of the consolidated amount of the debt for payment to be made in three installments, due by the last business day of the months of October, November and December 2015.
In relation to the payments under the second and third items above, the amount of each monthly installment will be increased by the SELIC rate for federal bonds, accumulated monthly, calculated from the month following the consolidation until the month prior to the payment, and 1% for the month in which the payment is being made.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.