In recent weeks, speculation has been increasing, based on statements by members of the government, about a new tax levied on the wealth and income of the highest income individuals in Brazil.

Already having difficulty with government financial reports and deficit balance for the year 2024, the federal government still expresses its intention to increase the income tax exemption range to up to R$5,000.00. The counterpart to this measure, therefore, would be an increase in the tax burden on those with higher income. There is still no concrete proposal, but, for example, a ventilated measure would be an additional range of the income tax range of rates which is currently limited to 27.5%, and could reach a rate range between 30% and 35%.

Thus, several studies from governmental and non-governmental entities are beginning to appear on the impact of government tax collection deriving from the aforementioned proposal of taxing the highest income individuals. And, as this is a minority portion of the population, the expectation is that the publication of such studies would help the claim to decrease the resistance to its implementation.

However, It is not rare that, in these study estimates, the impact of new tax planning that may be implemented is not taken into account. In some countries where similar measures were adopted, there was a migration of fortunes, investments, and a dispersion of assets to situations or countries with a lower final tax burden, consequently minimizing the initially estimated tax collection potential.

In parallel, other similar, more advanced measures, as already discussed in the context of the approved tax reform, such as an increase in the inheritance tax (ITCMD) and the IPVA of aircraft and boats have not yet been implemented. The amendment that intended to include the creation of the IGF (“Tax on Great Fortunes”) in the context of the Complementary Law of the Tax Reform has already been rejected by Congress. This suggests that new, more drastic measures to increase the tax burden on the rich will also have difficulty passing Congress.

In any case, it is worth monitoring developments on the topic and, if necessary, studying alternatives to anticipate this type of measure to mitigate possible adverse effects.