The federal government’s new tax regularization program offers individuals and companies the opportunity to join within 90 days. Law No. 14,973 reopens the Special Regime for General Regularization of Exchange and Tax Assets (RERCT-Geral), allowing the regularization of both undeclared assets abroad and undeclared income in Brazil.
Participants will pay a 15% income tax rate and a 15% fine. Under normal circumstances, income tax could reach 27.5%, with fines of up to 75%. The Federal Revenue Service has not yet released its revenue expectations, but the program is seen by the market as an important tool for the government.
Those who had already partially declared their income can correct their information and pay the same 15% tax, with an additional 20% penalty. To regularize income generated after December 31, 2023, it is possible to use the voluntary report, which will result in only income tax and interest being charged, without a penalty.
However, issues such as the possibility of levying ITCMD on asset ownership transfers remain. Additionally, gains from the closure of offshore companies may be taxed at up to 27.5% as income, rather than capital gains.
It’s crucial that taxpayers prepare records proving the lawful origin of the repatriated funds, as the Federal Revenue Service can monitor them for up to five years. Cryptocurrencies are also included in the program, with new asset reporting requirements in certain international contexts.
