Law No. 13,259/2016, which resulted from the conversion into Law of Provisional Measure No. 692/2015, was published in the Official Gazette on March 17, 2016. The Provisional Measure was converted with amendments to its original text, but the relevant changes to Section 21 of Law No. 8,981/1995 were maintained, with the consequent creation of the progressive tax rates levied on the capital gain earned by individuals as a result of the disposal of assets and rights of any nature, as detailed below:
- 15% on the amount of capital gain that does not exceed BRL 5,000,000.00;
- 17.5% on the amount of capital gain that exceeds BRL 5,000,000.00 and does not exceed BRL 10,000,000.00;
- 20% on the amount of capital gain that exceeds BRL 10,000,000.00 and does not exceed BRL 30,000,000.00; and
- 22.5% on the amount of capital gain that exceeds BRL 30,000,000.00.
Section 2nd of the Provisional Measure was maintained, establishing that the same progressive tax rates should also be applied to the calculation of the income tax levied on capital gains earned as a result of the disposal of non-current assets by legal entities not subject to the actual, deemed or arbitrated profit regimes (i.e. micro and small companies that have adopted the SIMPLES tax collection regime).
It is worth mentioning that paragraphs 1st and 2nd of Section 5th, which establish that the new progressive rates should be adopted to disposals occurred from January 1st, 2016, onwards, were subject to presidential veto as a result of their incompatibility with the rules set forth by Section 62, paragraph 2nd, of the Federal Constitution. Therefore, there are grounds to sustain that the Government’s intention is to apply the new rules to disposals occurring as of January 1st, 2017, even though this is a measure included in the fiscal adjustment’s package of 2016.
Similarly, it was also subject to presidential veto the new paragraph 5thincluded in Section 21st of Law No. 8,981/1995, which intended to adjust the capital gain amounts subject to the progressive taxation by the same rates applicable to the monthly progressive table related to the calculation of the individual income tax. According to the veto message, said indexation would not be in accordance with the economic policy of the Federal Government, as well as would not take into account the economic capacity of taxpayers, which could lead to distortions between different public policies.