LatinNews Daily - 29 August 2023

In brief: Brazil announces taxes for closed-end and offshore funds

* Brazil’s President Luiz Inácio Lula da Silva has announced two pieces of legislation aimed at taxing the “super-rich” and “tax havens”. Lula signed an executive decree (‘medida provisória’, MP) which will levy a tax of between 15% to 22.5% on closed-end funds – exclusive funds with at least R$10m (US$2.05m) and an annual maintenance cost of up to R$150,000. According to a press release from the president’s office, around 2.5m Brazilians have invested in closed-end funds, representing 12.3% (R$756.8bn) of total funds in the country. The government has estimated that the measure could raise around R$24bn in revenue between 2023 and 2026. At the same event in which he signed the MP, Lula also announced a legislative initiative known as the ‘Offshores and Trusts’ bill, due to be sent to congress. The bill would aim to tax income from capital invested in offshore funds with progressive rates from 0% to 22.5%. Currently, capital invested abroad is only taxed when it is redeemed and sent back to Brazil.

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