Bolsonaro government reduces taxes for large companies and withdraws R$ 5.8 billion from Lula’s coffers

On the penultimate day of his term, the Jair Bolsonaro (PL) government issued a decree to cut taxes paid by large companies, with an impact of BRL 5.8 billion on revenues for the first year of the new management of Luiz Inácio Lula da Silva (PT) .

The measure displeased members of the future economic team, who had already been asking the current government to refrain from measures that would have an effect on the coffers from next year.

The future Minister of Finance, Fernando Haddad (PT), has been pressured to show an improvement in the country’s accounts, after the increase in expenses authorized by the National Congress raises the prospect of a deficit for next year beyond R$ 200 billion .

The impact of the benefit is already foreseen in the 2023 Budget, but the reversal of exemptions is precisely one of the options of the new team to alleviate the deficit in 2023.

Haddad and his team are already working on a survey of the measures adopted to turn off the lights of Bolsonaro’s term, to explain their impacts and decide which of them will be revoked.

The decree, published in an extra edition of the Official Journal of the Union this Friday (30), reduces by half the rates of Pis and Cofins on the financial income of companies that adopt the non-cumulative regime to collect contributions. In general, only large companies opt for this modality.

The measure was signed by Vice President Hamilton Mourão (Republicans), since Bolsonaro opted to leave the country before Lula’s inauguration, this Sunday (1st).

“The aim is to reduce the Pis/Cofins tax burden on the financial revenues of companies that are in the non-cumulative system, freeing up resources so that they can expand their operations, invest and create new jobs”, says the General Secretariat of the Presidency of the Republic, without explaining the fiscal effects of the decision.

Non-cumulative regime companies pay a 9.65% PIS/Cofins rate on their revenues. However, this percentage drops to 4.65% when it comes to financial income —obtained with income from investments in the market, such as fixed income securities, in addition to interest charged from suppliers or discounts obtained by companies.

With the decree of the Bolsonaro government, the rate is reduced to 2.33% from January 1, 2023.

Even if the Lula government decides to revoke the decree, some impact will be felt by the new administration. This is because an increase in the rates of Pis and Cofins only takes effect 90 days after the publication of the act.