Federal tax collection jumps 70% to set a record for May

Taxes and federal contributions totaled R$142.106 billion in May, the highest value for the month since the start of the historic series of federal revenue, in 1995.

The result is a real increase (discounted for inflation) of 69.88% compared to the same month in 2020. Compared to April of this year, there was a 10.13% decrease in tax collection.

The revenue result came in higher than the average estimate of R$136.1 billion in the Broadcasting Outlook Survey, whose range ranged from R$108.7 billion to R$145 billion.

In the accumulated result for the year to May, the federated collections totaled R$744.828 billion, which is also the largest volume for the historical series period (1995).

The amount still represented a real decrease of 21.17% compared to the first five months of last year.

Guedes wants to expect an IRPJ rate cut

In a virtual press conference after the data was published, the Minister of Economy said Paulo Geddes, celebrated the data and stated that the group’s result shows that the Brazilian economy is “back on its feet”.

“The Brazilian economy continues to have a positive surprise,” the minister said.

Guedes took the opportunity to say that the government is considering changing its proposal to lower the IRPJ rate (Income tax for legal entity) to Promote a 5 percentage point cut as early as 2022.

to me The original tax reform proposal put forward by the government on Friday (25).The IRPJ, which today is 15%, will drop by 2.5 points in 2022, to 12.5%, and then by another 2.5 points the following year, to 10%.

“We are looking at whether, instead of 2.5 in one year and 2.5 in the next, we can get 5 points immediately next year,” Geddes said.

Extraordinary revenue affected record results

According to the Internal Revenue Service, the result is mainly explained by non-recurring factors, such as unusual collections of approximately R$16 billion of IRPJ/CSLL from January to May 2021.

Additionally, compensation increased by 89% in May 2021 compared to May 2020 and grew by 46% in the cumulative period,” the agency continues.

Exemptions exceed the balance of 2020

The exemptions granted by the government resulted in a tax exemption of R$39.825 billion in the first five months of this year, a larger amount than in the same period last year, when it was R$37,213 billion.

In May alone, exemptions totaled R$8.962 billion, which is also higher than those recorded in May last year (R$8.446 billion).

The PEC emergency plan, approved by the National Congress at the beginning of the year, includes a plan to gradually reduce stimulus and tax benefits (subsidies, waivers and exemptions) to 2% of gross domestic product (GDP) in eight years – the current level of approximately 4.2% of output gross domestic.

(*With information from Reuters Estadão content)