Provisional Measure No. 692/2015 was published on September 22nd, 2015, with the purpose of implementing two points of the fiscal adjustment program intended by the Federal Government, namely: (i) creation of progressive rates for income tax levied on capital gains and (ii) reduction of tax litigation and anticipation of collection of taxes by postponing the deadline for accession to the PRORELIT and reducing the minimum cash payment required.

In relation to income tax levied on capital gains, the Provisional Measure changed Section 21 of Law No. 8,981/1995 and established progressive rates ranging from 15% to 30%, levied on the capital gains earned by individuals as a result of the disposal of assets and rights of any nature, as detailed below:

  • 15% of the amount of capital gains that do not exceed BRL 1,000,000.00;
  • 20% of the amount of capital gains that exceed BRL 1,000,000.00 and do not exceed BRL 5,000,000.00;
  • 25% of the amount of capital gains that exceed BRL 5,000,000.00 and do not exceed BRL 20,000,000.00; and
  • 30% of the amount of capital gains that exceed BRL 20,000,000.00.

In addition, Section 2 of the Provisional Measure provides that the same rates should also be applied when calculating income tax levied on capital gains earned as a result of the disposal of non-current assets by legal entities that are not subject to the taxable income method, the estimated profit method or the arbitrated profit method.

Regarding the PRORELIT, the deadline to opt for the inclusion of debts in the program was postponed to October 30th, 2015, and theminimum cash payment required was reduced from 43% of the consolidated value to the following percentages:

  • 30% of the consolidated value, in case of full payment until October 31st, 2015;
  • 33%, in case of payment in two installments – the first one until the last business day of October and the second one until the last business day of November of 2015; and
  • 36%, in case of payment in three installments –the first one until the last business day of October, the second one until the last business day of November and the third one until the last business day of December of 2015.

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Founded in 2001, Tauil & Chequer Advogados is a full service law firm with approximately 90 lawyers and offices in Rio de Janeiro, São Paulo and Vitória. T&C represents local and international businesses on their domestic and cross-border activities and offers clients the full range of legal services including: corporate and M&A; debt and equity capital markets; banking and finance; employment and benefits; environmental; intellectual property; litigation and dispute resolution; restructuring, bankruptcy and insolvency; tax; and real estate. The firm has a particularly strong and longstanding presence in the energy, oil and gas and infrastructure industries as well as with pension and investment funds. In December 2009, T&C entered into an agreement to operate in association with Mayer Brown LLP and become "Tauil & Chequer Advogados in association with Mayer Brown LLP."

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This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.