Will a new digital tax over financial transactions be created in Brazil in 2021?
Market Rules
In 2020, Brazil's minister of the economy Paulo Guedes sent part of the federal government's tax reform proposal to Congress. The proposal included the creation of a new "digital tax", which would have a similar format to that of the extinct Provisional Contribution on Financial Transactions (CPMF).
The creation of the tax became a controversial point between Guedes and Congress. Even though the proposal has not yet been sent in full to Congress, many deputies and senators have already warned the minister that they would not approve any increases in the tax burden. In that scenario, Guedes' project may be incorporated into the processing of the two initiatives that are already underway: either a constitutional amendment proposal in the Senate (PEC 110/2019) or one in the House (PEC 45/2019).
If by the end of 2021 Brazil's Congress determines the creation of Paulo Guedes' proposed digital tax over financial transactions, this market will be resolved as "Yes". It is not necessary, for that, that the tax is put into effect by the referred deadline, as long as its creation date has already been determined by Congress by then.