Brazil will give income tax exemption to foreign investors, says Guedes

The Brazilian government is expected to announce in the coming days the exemption from income tax for foreign investments in debt securities of Brazilian companies. In practice, this will make it cheaper for them to borrow funds from abroad.

The expectation is that the measure will help in the capitalization of companies that invested in privatization in Brazil, such as in the concession of roads. “Private companies need cheap financing. In the past, when the government was the driver [de investimentos]we gave tax exemption for foreign investors to buy bonds [ligados ao governo]. Now that the driver is private investment, we need to give the same exemption. So we will be removing taxes on foreign investments in private bonds. We should announce this next week,” minister Paulo Guedes told sheetin New York.

The measure should reduce collection by R$ 450 million per year and can be taken by the Executive, without going through Congress. Currently, there is an incidence of 15% on capital gains in these investments, when they are carried out by non-Brazilians.

Guedes traveled to the US to meet investors in New York and Miami. This Tuesday (1st), the minister participated in an event at the Brazilian American Chamber of Commerce in New York. He spoke to an audience of about 40 people, made up of businessmen and representatives of the financial market, for about two hours.

He said that people abroad may be misinformed about the current situation in Brazil, highlighted positive numbers in the country, such as the drop in unemployment to 11.6%, and again said that inflation in the country should be controlled this year. .

“In Brazil, inflation was 3% [antes da pandemia] and reached 10%. We already live with 5,000%. So 10% for us is child’s play. It’s going to be six months, nine months and that’s it. but not here [nos EUA]. Inflation is waiting for you around the corner,” she said.

Guedes defended the Jair Bolsonaro government. He said that the administration is making a transition from a state-led economy model, adopted, in his view, by all governments since the military dictatorship, to a scenario where private investments predominate.

He believes that the current Brazilian crisis, with high unemployment and loss of income and purchases, is the result of past governments, which spent a lot of public money and stifled entrepreneurship due to excessive rules and taxes.

“It is not Bolsonaro who destroyed Brazil. The country has been destroyed for 40 years,” he said. “He has bad manners, but he’s a nice guy,” he said, in English.

He also said that Bolsonaro and right-wing parties arrive in a competitive situation in this year’s elections. “I’m not saying that Lula will not win, but that it will be a disputed election”, he projected. Guedes also praised Tarcísio de Freitas, the current Minister of Infrastructure. “Tarcísio will be the next governor of São Paulo”, he projected.

The minister also addressed the idea of ​​a single currency on the South American continent, of which Brazil could be the anchor, “in the same way that Germany is with the euro”. And that if the idea had advanced a few years ago, the economies of Argentina and Venezuela “could have been saved.”

“In four, five years, we will have a digital currency, blockchain, nobody using cash. As in China, everybody [pagando] with cell phones”, he projects. “In a few years, there will be six or seven relevant currencies in the world, and the others will disappear due to irrelevance. Even the citizens of the countries that use them will abandon them,” she estimates.