Brazil to tax closed-end, offshore funds

(Reuters) – Brazilian President Luiz Inacio Lula da Silva on Monday will sign an executive measure to tax closed-end funds and a bill to tax offshore funds, according to a statement from the Planalto presidential palace.

The measures, which have to be approved by Congress, had already been signaled by Lula’s administration and are seen as essential to boost public revenue and reach its commitment to zero primary deficit by next year.

Under an executive order, the government will tax income from closed-end funds from 15% to 20%, levied twice a year.

This is expected to generate 24 billion reais in revenue between 2023 and 2026, the government said. The proceeds are expected to offset a revenue loss from expanded income tax exemptions for individuals.

Around 2,500 Brazilians have invested in closed-end funds, totaling 756.8 billion reais ($155.18 billion), or 12.3% of the country’s total investment funds.

Separately, Lula will send a bill to Congress to tax income from offshore funds with rates from 0% to 22.5%.

($1 = 4.8768 reais)

(Reporting by Peter Frontini; Editing by Sandra Maler)