A Provisory Measure (MP) issued by the Brazilian government reduced to zero the income tax owed by foreigners who have certain investments here.
Under the new rule, the exemption applies to the earnings of parties resident or domiciled abroad that are shareholders of Funds for Investment in Infrastructure Equity Interests (FIP-IE) and Investment in Equity Interest in Intensive Economic Production in Research, Development and Innovation (FIP-PD&I) that are received between January 1, 2023, and December 31, 2027.
Moreover, also exempted from income tax are a series of earnings received by overseas residents generated by bonds or securities that are publicly distributed, issued by private companies not classified as financial institution or mutual funds investing in credit rights regulated by the Brazilian Securities Commission (CVM), the originating party of assignor of which is not a financial institution.
The exemptions mentioned above are also valid for investments made by sovereign funds even if they are headquartered in tax havens.
Brazil expects that, with these tax benefits, it will be able to obtain funding from foreign resources for investment in the nation’s financial market.