International Tax Newsletter - Maio 2024

Deadline for opting to update the value of assets abroad ends on May 31st

On the same day as the deadline for the Brazilian Individual Income Tax Return and the annual MEI (Individual microentrepreneur) Income tax return comes to an end, the deadline for opting to update assets and rights abroad will also come to an end on May 31st, as referred to in art. 14 of Law #14,754, of December 12, 2023, regulated by RFB Normative Instruction #2,180, of March 11, 2024.

It is worth remembering that there is an exception in delivery for taxpayers domiciled in the municipalities of Rio Grande do Sul identified in the Single Annex of Ordinance RFB #415, of May 6, 2024. For taxpayers domiciled in the municipalities included in the extension, the deadline for the option for updating assets and rights abroad was extended to August 31, 2024, as provided in art. 2nd of the RFB Ordinance.

Individuals residing in the country may choose to update the value of their assets and rights abroad to the market value on December 31, 2023, in which case they will have to tax the difference between the updated value and the acquisition cost by IRPF, at the definitive rate of 8%.

Federal Revenue anticipates consultation on the 1st batch of IRPF 2024 refunds

From 10am on May 23rd, the Federal Revenue Service of Brazil (RFB) will make available the consultation of the first batch of Brazilian Personal Income Tax (IRPF) refunds for 2024, considered the largest in history by the authority.

The release for consultation will be made eight days before the payment of the lot, which is not standard RFB procedure, which usually releases only seven days after payment, thus anticipating consultation by taxpayers. Around 5.6 million taxpayers will be able to check whether they will be entitled to a refund, including residents of Rio Grande do Sul, who were prioritized due to the recent floods. This batch also covers residual refunds from previous years, totaling R$9.5 billion. 

fThe batch will benefit 5,562,065 taxpayers, of which a large proportion are priority: 2,595,933 people between 60 and 79 years old, 1,105,772 teaching professionals, 886,260 gauchos, 787,747 people who used the Pix key or the pre-filled declaration, 258,877 elderly people over 80 years old and 162,902 people with disabilities or serious illnesses. The highest priority was given to taxpayers in Rio Grande do Sul, totaling more than R$1 billion in refunds due to calamities in the state.

To check the refund, taxpayers must access the Federal Revenue website, click on "Meu Imposto de Renda" and then on "Consultar a Restituição". It is also possible to consult through the Federal Revenue app available for tablets and smartphones. Payment will be made on May 31st, directly into the informed bank account or using the CPF type Pix key.

New incentive law for the events sector approved

In a ceremony at Palácio do Planalto, President Luiz Inácio Lula da Silva sanctioned Bill #1026/2024. The new legislation revitalizes and reformulates the incentives of the Events Sector Emergency Resumption Program (Perse), initially created in 2021 to support companies affected by the Covid-19 pandemic.

The Minister of Tourism, Celso Sabino, present at the event, emphasized that the government sought, in partnership with the National Congress, to balance fiscal austerity with the benefits for the events sector. According to Sabino, the new law is more modern and efficient, guaranteeing both the supervision of public resources and the fight against fraud, especially benefiting micro and small entrepreneurs who most need support.

Furthermore, Sabino highlighted the creation of 240 thousand new jobs in the tourism sector between January 2023 and April 2024, as a result of government initiatives and social income distribution programs. “Brazil jumped 24 positions in a recent survey by a major North American travel insurer, becoming the safest country in South America, the second in the Americas and the 15th in the world for tourism,” he said.

The Minister of Culture, Margareth Menezes, reinforced the importance of Perse for the creative economy, which represents around 3% of GDP and employs 7.5 million people. Menezes highlighted that the sensitivity of the National Congress was crucial to support millions of workers in the cultural sector, who were also severely impacted by the pandemic.

Resumption of National Migration Registration Card issuance in Brazil

The resumption of the National Migration Registration Card (CRNM) issuance by the Brazilian Federal Police marks a significant step towards streamlining immigration procedures and ensuring the proper documentation of foreign nationals residing in the country. With the issuance process back in motion, Federal Police Unities across Brazil are gearing up to efficiently handle the influx of CRNM card requests. This move not only facilitates the integration of immigrants into Brazilian society but also enhances security measures by accurately documenting and tracking foreign residents.

Nevertheless, the backlog of pending RNM cards poses a challenge to the normalization of operations within the service. The sheer volume of pending requests adds uncertainty to the timeline for full operational capacity. Efforts to expedite the processing of these pending cards are underway, but until the backlog is significantly reduced, it remains difficult to forecast when the service will operate at its optimal level. Despite these challenges, the resumption of CRNM issuance signals progress towards enhancing immigration procedures in Brazil. 

Commission approves Complementary Bill that provides tax exemption for micro-enterprises with annual revenue of up to R$96 thousand

The Industry, Commerce and Services Committee of the Chamber of Deputies approved the Complementary Bill (PLP) 35/23, which exempts micro-enterprises with annual gross revenue of up to R$96 thousand from taxes of Simples Nacional. The exemption will be valid for five years and, if approved, will modify the Micro and Small Business Statute.

The rapporteur, deputy Jorge Goetten (PL-SC), recommended approval. “The proposal seeks to provide tax relief for small businesses that, due to the Covid-19 pandemic, were severely affected”, argued Jorge Goetten.

“Micro-enterprises were hit hard by the Covid-19 pandemic,” said the author of the project, deputy José Medeiros (PL-MT). “The proposed tax incentive should help generate jobs and income”, said the parliamentarian.

Today, the annual revenue that allows for inclusion in the simplified taxation regime is up to R$360,000 for micro-enterprises and up to R$4.8 million for small ones.

The proposal will still be analyzed by the Finance and Taxation committees; and Constitution and Justice and Citizenship. It will then proceed to the Plenary.

Treasury publishes the rules for authorizing the operation of sports betting and online gambling 
The Prizes and Betting Secretariat of the Ministry of Finance (SPA/MF) published Ordinance SPA/MF nº 827, of May 21, 2024, with the rules and conditions for obtaining authorization for commercial exploitation of the lottery betting modality. fixed quota by private economic agents throughout the national territory. Widely expected by “bet sites”, the publication of the Ordinance will allow the regularization of legal entities that currently operate the fixed-odd betting lottery in Brazil, in the sports betting and online gaming segments.

SPA/MF Ordinance No. 827 establishes the rules and conditions for obtaining authorization for the commercial exploitation of sports betting and online gambling in Brazil by private economic agents throughout the national territory.

It defines that the commercial exploitation of sports betting and online gambling will be exclusive to legal entities that receive prior authorization from the Secretariat of Prizes and Bets of the Ministry of Finance to act as operating agent.

According to the document, those operating in the Brazilian market must present authorization and comply with the rules by December 31st of this year. From January 1, 2025, those who do not have a license will be prohibited from operating the activity and will be subject to penalties.

The document establishes that the grant will cost R$30 million for up to three brands, with authorization to operate for five years. It also defines that the company must be established in Brazil with a minimum shareholding of 20% from a Brazilian partner. No company may establish itself in Brazil solely as a branch of an operator incorporated abroad.

Companies that request authorization within 90 days after the date of publication will have an additional period of time to pay authorization fees, and the guarantee that the Secretariat of Prizes and Bets will grant authorization by December 31st.

To obtain the license, the operator must present documents for legal qualification, starting with the authorization application, identification of controllers, registration with the CNPJ and others. In addition, you must present certificates proving tax and labor regularity and economic-financial qualifications