Brazilian Chamber approves spending containment measures from the IOF (Tax on Financial Operations) bill in a project to update property prices.

BRASILIA - In a victory for the Lula government, the Chamber of Deputies approved on Wednesday, the 29th, the bill that establishes the Special Regime for Updating and Regularizing Assets (Rearp) and resurrects part of the Provisional Measure that was an alternative to the larger increase in the Tax on Financial Operations (IOF) .

The text that now returns to the Senate largely follows the terms of the report presented by Congressman Juscelino Filho (União-MA), who, after an agreement with the Lula government, incorporated spending containment measures from the Provisional Measure that the Chamber allowed to expire earlier this month.

The text revisits proposals related to PIS/Cofins compensation, unemployment insurance for fishermen (a benefit paid to artisanal fishermen), and the "Pé-de-Meia" program, a scholarship program to encourage students to remain in high school.

The approval represents a victory for the government, which still intends to resubmit another part of the IOF (Tax on Financial Operations) bill to Congress for further review, focusing on revenue-raising measures – which, in turn, face more resistance. Government leaders have indicated that the proposal to tax betting and fintech companies, as well as increase the Interest on Equity (JCP), should be submitted as a bill with constitutional urgency, for voting within 45 days.

From the text approved this Wednesday, the main measure is the delimitation of the hypotheses for undeclared PIS/Cofins compensation, with the objective of combating tax fraud by companies. With this proposal, the government intends to collect R$ 10 billion in 2025 and R$ 10 billion in 2026. In addition, the project includes a proposal that eliminates the R$ 20 billion limit for the operation of the "Pé-de-Meia" program and incorporates it into the minimum education budget.

Also incorporated were provisions regarding the taxation of securities lending, conditions for the deductibility of losses in hedging operations with foreign counterparties, and the provision that the maximum duration of the temporary disability benefit granted by document review (Atestmed) will be 30 days.

Other points include limiting federal spending on financial compensation between the General Social Security System and the pension systems for civil servants of the Union, States, Federal District and Municipalities to a specific budget allocation, as well as regulating procedures related to the Salary Variation Compensation Fund (FCVS).

Chamber weakens tightening of the closed season insurance policy.

The project also includes measures to inhibit fraud in the granting of unemployment insurance during the closed fishing season. During the vote, some rules were removed from the text: those that limited the granting of the benefit to an allocation foreseen in each budget law and those that established that the granting should follow an order of registration for each closed fishing season.

The amendment in question was presented by Representative Rodrigo Gambale (Podemos-SP), who argued that the removal of such items was justified by "the need to avoid excessive budgetary restrictions and legal uncertainty in modifying the benefit."

"By restricting access and conditioning payment on budgetary availability, the text completely distorts the program's objective, converting a social right into a mere administrative option, which is legally and morally unacceptable," he argued.

Juscelino initially included a provision in the text to overturn the limitation on early withdrawal of the FGTS (Severance Indemnity Fund) anniversary payment, defined by the fund's Board of Trustees in early October. Later, however, Juscelino removed the measure in an updated version of the report.

Property price update

The bill, overseen by the former Minister of Communications, establishes the Special Regime for Updating and Regularizing Assets (Rearp), allowing for the updating of the value of movable and immovable property acquired with legally sourced funds by individuals, as well as the regularization of assets or rights of legal origin that were not declared or were declared with omission or inaccuracy by individuals or legal entities.

The bill establishes two options: asset updating, with a 3% tax rate on capital gains for individuals, and asset and rights regularization, with a 15% tax rate plus a 15% penalty on the assessed tax. It also provides for the extinction of criminal liability for tax crimes upon compliance with the regime's conditions.

Juscelino's opinion also opened the possibility for companies to adhere to the update, as well as the updating of assets located abroad. It is also foreseen that taxpayers who updated real estate assets through the Special General Regularization Regime (RERCT-Geral) may choose to migrate to Rearp.

Enrollment in Rearp may be made within 90 days of the eventual approval of the law, and the payment of taxes and fines stipulated in the program may be made in up to 24 installments. The value of acquired assets may be updated until December 31, 2024.