Lula’s government proposes new laws in Brazil

Category: Americas Fintech Regulatory

President Luiz Inacio Lula da Silva’s government has issued an executive order aimed at generating revenue by taxing capital income from financial assets overseas by persons residing in Brazil.

Another recently proposed law is the prohibition of ‘fake news and disinformation’ available online. The law will penalise anyone found guilty of writing and spreading ‘fake news’ online. If this goes through parliament, Brazil will be the first democratic country to adopt such a law.

Another new proposal is for a tax framework for a tax on gross gaming revenue less winning paid to customers. This proposed law is based on the UK tax model. zil government to tax income from financial investments obtained abroad,

Taxing capital income from financial investments

Any income earned from abroad by residents in Brazil will be taxed. This is to include income obtained from financial investments upon the sale or maturity of assets. Profits and dividends will be taxed at the end of each year. Assets from trusts will also fall under this scheme.

Income up to 6,000 reais (US $1,203) will be tax exempt. Income earned between 6001 reais and 50,000 reais (US $9,900) will be taxed at 15 percent. Income above 50,000 reais will be taxed at 22.5 percent.

This means that the government will benefit from a new revenue income stream of 3.2 billion reais ($641 million) and by year 2025 the new income stream will generate 6.7 billion reais (US $1,290 million)

The measure was published in a special edition of the official Brazilian government gazette. During the President’s speech on Labour Day, no mention was made of this new tax but instead President Lula announced exemption of income tax for low income earners.

New censorship law

If the proposed censorship law is signed off, it will have an impact on anyone living in a democratic country.

Brazil will make history as it will be the first democratic country to ban fake news. Many are questioning how the balance will be achieved in relation to ‘freedom of speech’. Others are objecting to being restricted to using emerging technologies.

The law would give authority to enforcement officers to take action against anyone deemed to be publishing anything that may be questionable or classified as ‘false truths’. Guilty parties will be punished and fined. It is reported that this law is championed by government officers, pro-government lawyers and surprisingly even by a number of journalists.

The EU is also considering a similar law and Brazil will be a case study, especially with regards to how tolerant the public will be to changes in the way they will user online platforms and social media sites. The law is considered to be controversial and many feel that their voice will be supressed.

Regimes with similar laws are Saudi Arabia, the United Arab Emirates, Egypt, Singapore and Qatar.

Sportsbetting law

A new tax regime is being proposed for sportsbetting. This will generate 12 billion reais per year (US $2.1 billion) in taxes. As a consequence, it will enable President Lula to deliver his political manifesto and economic programme.

The Brazilian government maintains its agenda to legalise sports betting in 2023. A regulated sportsbetting market also means that unregistered operators will no longer be permitted to advertise or sponsor footballers or clubs. This is expected to have a huge impact on offshore operators who will have to apply for a licence or shut off their presence in the Brazilian jurisdiction.

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