Brazil: New Capital Gains Tax Rates from 2017

Brazil: New Capital Gains Tax Rates from 2017

Brazilian tax authorities (RFB) have clarified that the new capital gains tax rates will apply from January 1, 2017.

Brazil had converted the Provisional Measure 692/2015 (PM 692) into Law 13,259 in March earlier this year. The law increased the capital gains tax rates to:

  • 15% on gains up to BRL 5 million
  • 5% on gains over BRL 5 million, up to BRL 10 million
  • 20% on gains over BRL 10 million, up to BRL 30 million
  • 5% on gains over BRL 30 million

The clarification eliminates the uncertainty that arose after some paragraphs addressing capital gains from transactions occurring before December 31, 2015 were removed from the final text of the law making it unclear whether the higher tax rates were in effect for 2016.

The changes may affect reorganizations, sales, or acquisitions of Brazilian investments on or after January 1, 2017 and non-resident investors (both individuals and/or legal entities) should take note as they plan these transactions.

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