SAO PAULO (Reuters) – Brazil’s government published an executive order late on Thursday that will effectively impose a minimum 15% tax on the profits of multinational companies, a publication in the country’s official gazette showed.
WHY IT’S IMPORTANT
The Brazilian government has been looking for new sources of revenue to meet budget targets, including reducing the budget deficit to zero, while it is averse to large-scale spending cuts. It says the new move is in line with global efforts to combat tax evasion.
DETAILS
The executive order imposes an additional levy on Brazil’s social contribution tax on corporate income (CSLL) to ensure the minimum tax is 15%, the release said.
Brazilian officials had previously said the move was seen as a way to align the country with tax talks the country has been undertaking as G20 president and ensure the 2025 budget target is met.
IMPORTANT QUOTE
The move comes as Brazil “adapts to the Global Anti-Base Erosion Rules (GloBE Rules) established by the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting,” according to the order signed by President Luiz Inacio Lula da Silva.
ADDITIONAL BACKGROUND
Brazil’s finance ministry did not immediately detail how much it expects to collect in additional tax revenue after this move. Government officials will hold a press conference on the topic later on Friday, the ministry said.
Executive orders in Brazil have immediate effect but must be ratified by lawmakers within four months or expire.
(Reporting by Gabriel Araujo; Editing by Hugh Lawson)
