The text of the complementary law that regulated the tax reform may be adjusted to clarify that investment and equity funds will not pay the Tax on Goods and Services (IBS) and the Contribution on Goods and Services (CBS), the Ministry of Finance reported this evening . In a note, the ministry stated that there was no intention of charging extra taxes on these funds, whose income already pays Income Tax, and reiterated that the veto was only technical.
“Some analysts are evaluating that the veto of item V of art. 26 [da lei complementar]which provided that investment funds would not be taxpayers, could allow the interpretation that fund operations with securities could be taxed. Although this is not the interpretation of the Ministry of Finance, if it is necessary to make any adjustments to the text to make it clear that there is no incidence of IBS and CBS on investments of investment funds in securities, the Ministry of Finance will work to make this adjustment”, wrote the ministry’s advisor.
The veto of the section that provided for the exemption of new taxes for equity funds and investments in tax reform received criticism from investor entities. According to the Brazilian Association of Financial and Capital Market Entities (Anbima), the measure takes away the neutrality of the reform by treating directly direct investments, which create jobs and will be exempt from IBS and CBS, differently and financial investments, which will pay taxes.
“The veto takes away the neutrality sought by the reform, as it places the funds in an asymmetrical condition in relation to direct investment, which is not subject to IBS/CBS taxation. This has an impact on the business of an industry with more than 41 million accounts and R$9.2 trillion in net worth”, highlighted the association in a note this Friday (17).
According to Anbima, the exemption of IBS and CBS investment and equity funds was discussed with the government during the processing of the complementary law project in Congress. According to the entity, the veto opens up loopholes for funds to be charged IBS/CBS and Income Tax, which would reduce the attractiveness of these funds.
“Investors will be one of those most affected by this change. In addition to the incidence of Income Tax, the funds could be charged IBS/CBS on their investments, which would reduce the net profitability of their investments, making investment in funds unfeasible”, criticized Anbima.
Technical criteria
In a press conference on Thursday (16), the day the complementary law was sanctioned, the extraordinary secretary for Tax Reform at the Ministry of Finance, Bernard Appy, explained that the veto was based on legal and technical issues. This is because the constitutional amendment to the tax reform, enacted in 2023, did not provide for specific exemptions for these sectors.
“The funds were defined as non-contributing, but this characterization would be equivalent to a tax benefit not provided for in Constitutional Amendment 132, making the exemption unconstitutional,” explained Appy. The Federal Attorney General’s Office (AGU) also assessed that the section granted a tax benefit not authorized by Congress.
Rules
Currently, investment funds in Brazil operate under specific taxation rules, which vary depending on the type of fund. The income from Real Estate Investment Funds (FIIs) paid to individuals was exempt from Income Tax, as long as the funds had at least 50 shareholders, with no investor holding more than 10% of the shares.
Other funds, such as fixed income and multimarket, and shares follow a regressive Income Tax table, in which the rate decreases over time of investment. They are also subject to “come-quotas”, a semi-annual tax advance.
The consumption tax reform did not change the collection of Income Tax. The topic will only be discussed in the second stage of tax reform this year. Now, the financial market claims that funds may have to pay CBS and IBS as the taxes gradually come into force, from 2026 to 2033.
