Lira maintains income tax exemption up to R$5,000 and increases the discount range to R$7,350

Federal deputy Arthur Lira (PP-AL) presented this Thursday (10) the opinion on the bill that intends to expand the Income Tax exemption range for those who earn up to R$5 thousand, maintaining this benefit and changing some of the government's other proposals.

The bill, which was subject to a collective review and is expected to return to the deputies for review next week, provides for an increase in the progressive tax deduction bracket from R$7,000 to R$7,350, and a more flexible approach to income tax for those earning more than R$50,000. This tax will offset R$25.8 billion in lost revenue from the exemption bracket.

Lira stated that previously taxed income would raise more than necessary – R$34 billion – and that, therefore, he was able to reduce it.

"It was designed to completely exempt those earning up to R$5,000, and proportionally exempt those earning up to just over R$7,000, and to ensure tax justice in this country. But the overriding principle advocated is neutrality," he told reporters.

In the background, however, the relaxation of the other end—those who earn more—was intended to ensure approval by other representatives. Among the changes are the removal of fixed-income securities such as LCI, LCA, CRI, and CRA from the calculation of the new minimum tax, savings income, compensation, pensions, or retirement benefits resulting from work-related accidents or serious illnesses.

The tax rate on profits and dividends remains at 10%, but with some exceptions that are now exempt, such as payments, credits, delivered or remitted to foreign governments in cases of reciprocity, sovereign wealth funds and entities abroad whose main activity is the administration of social security benefits.

The rapporteur pointed out in the opinion that the 10% tax will be progressive, which should vary on income from R$600,000 to R$1.2 million per year.

Lira even considered including compensation for the IOF (Tax on Financial Transactions) in the report – which recently generated a serious crisis between the Planalto Palace and Congress – but left it out.