Analysis of Brazil’s Proposed Tax Measures for 2025

Brazil’s Finance Ministry has presented a series of tax proposals aimed at taxing big tech companies and implementing a global minimum tax on multinational corporations in order to reach its fiscal goals for 2025. These measures are part of a larger effort to align with global discussions on tax cooperation and address revenue shortfalls in the coming years. The proposals include changes to income taxes, social contribution tax on corporate income, and interest on equity payments. Additionally, the government is relying on new dispute resolution programs and tax negotiations to bring in billions of reais in revenue.

The Finance Ministry’s plan includes taxing big tech companies and imposing a global minimum tax of 15% on multinational corporations. These measures are intended to generate additional revenue and help achieve the 2025 fiscal goal. The ministry also estimated potential revenue of 17.9 billion reais from an increase in certain income taxes and proposed changes to the social contribution tax on corporate income and interest on equity payments. These changes are part of a larger package of tax measures aimed at raising 46.7 billion reais in revenue for next year.

Despite the government’s efforts to increase tax revenue, there are concerns about the feasibility and impact of these measures. Chief economist Rafaela Vitoria expressed skepticism about the approval of the tax increase measures included in the 2025 budget bill. Economists surveyed by the central bank also project a primary deficit in 2025, highlighting the challenges facing the government in achieving its fiscal targets. The proposal to end tax waivers on payrolls for companies in certain sectors and smaller municipalities has faced opposition, with a bill pending approval in the Lower House.

The Finance Ministry estimates raising 58.5 billion reais in tax revenue next year, including revenue from a new dispute resolution program for large taxpayers and rulings by Brazil’s Federal Administrative Council of Tax Appeals. The ministry also expects to generate additional revenue by correcting tax distortions, bringing the total projected revenue to 20 billion reais. However, there are concerns about the government’s ability to implement these measures effectively and meet its revenue targets for 2025.

Brazil’s proposed tax measures for 2025 reflect the government’s efforts to increase revenue and address fiscal challenges. The plan to tax big tech companies and implement a global minimum tax on multinational corporations is part of a broader strategy to align with global tax cooperation discussions. However, there are challenges and controversies surrounding the proposed tax changes, with economists and experts expressing skepticism about the government’s ability to achieve its fiscal goals. It remains to be seen how these tax measures will be implemented and whether they will be successful in generating the projected revenue for 2025.