Government wants to change deadlines and limits for charging IR on investments on the Stock Exchange

The bill that the president’s government Luiz Inácio Lula da Silva (PT) prepares to forward to the National Congress on measures aimed at the capital market, it must include a specific chapter for taxation rules on gains on operations on the Stock Exchange and organized over-the-counter markets.

The text, to which the InfoMoney had access, one of its objectives is to improve the rules for taxation of operations, in order to “simplify the calculation of taxes owed by individuals and legal entities”. According to a source from the economic team consulted by the report, the idea is to standardize standards, correct distortions and facilitate access for new entrants to these types of investments.

The project, already forwarded by the Ministry of Finance to the Civil House, seeks to bring clear rules for measuring the net gains obtained in operations carried out in the stock exchange and organized over-the-counter markets, consolidating rules that were already included in the infra-legal regulations − movement anticipated in January by the InfoMoney.

In the case of operations on the Stock Exchange, the main change concerns the periodicity of taxation, which changes from monthly to quarterly. Furthermore, the limit for exempt transactions increases in the same proportion: from R$20,000 per month to R$60,000 in 3 months.

The idea is to increase flexibility and also facilitate possible compensation for losses in operations. “We try to simplify the life of the small investor. Instead of worrying about taxes 12 months a year, he only worries about 4”, argued a technician from the Ministry of Finance.

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The 15% rate was maintained on the earnings of individuals residing in the country and exempt legal entities opting for Simples Nacional. In case of “day trading” − that is, negotiations, with the same securities, started and closed on the same day (learn more about the subject by clicking here) − the rate, which is currently 20% on income, will be reduced to the same 15% as for other operations .

The text also provides that net gains become part of the IRPJ and CSLL calculation bases for legal entities taxed based on real, presumed and arbitrated profit. There is no longer a separate collection of these gains, nor is there a limitation on the offsetting of gains and losses of the same nature.

CDBs, debentures…

The bill that will be sent to the Legislative Branch consolidates the rules for taxation of income produced by bonds and securities earned by individuals resident in the country. The general rules are applied to interest and gains realized in the negotiation, on the secondary market, of public and private credit securities, such as bank deposit certificates (CDB), debentures and commercial notes.

Income Tax Withheld at Source (IRRF) is applied to these operations, at decreasing rates, from 22.5% to 15%, depending on the application period. The cash basis is preserved to define the moment of taxation, which will occur on the date of payment of interest and other periodic income and on the date of amortization, redemption, liquidation or sale of the investment.

The text, however, exempts banks, brokers, distributors, insurance companies and other legal entities in the financial sector from IRRF withholding tax and includes factoring companies and securitization companies in this list of legal entities. Stock, commodity and futures exchanges and settlement and clearing entities, which are responsible for market infrastructures, are also exempt.

The federal government’s economic team believes that, in this way, the possibilities for structuring products should increase, without any change in the final tax burden to which the sector is subject. In practice, this can make fundraising costs cheaper for companies and increase the offer to investors.

In conversation with the InfoMoneya source from the economic team explained that maintaining the income tax withholding rule for financial intermediation companies affects the dynamism of the market, as it compromises cash that could be used in new operations.