Tax Area

Ordinary Law No. 14,446 was enacted on September 2, 2022, temporarily increasing by 1% the Social Contribution on Net Profit (CSLL) of financial institutions. 

Until December 31, 2022, the contribution tax rate will be 16% in the case of private insurance companies, capitalization companies, securities dealers, exchange and securities brokers, credit, financing and investment companies, real estate credit companies, credit card administrators, leasing companies, credit cooperatives and savings and loan associations. In regards to banks of any kind, this tax rate will be 21%.   

But why was this law created? 

In march of this ear, the law Relp - Program for Rescheduling the Payment of Debts within the scope of Simplified Taxation System (Simples Nacional) - was enacted. Individual Micro Entrepreneurs (MEIs) and companies opting for Simples Nacional that adhere to the program until April 29, 2022 will have discounts on interest, fines, and charges proportional to their drop in revenues. In general terms, it is an alternative for companies to pay their debts to the government in installments.  

Consequently, this initiative, by itself, would cause an imbalance in the Federal Government’s revenues. Therefore, in order to compensate the collection and maintain the budget-financial balance, it became necessary to temporarily increase, in this case, the CSLL tax rate.  

The Social Contribution on Net Profit is a tax intended to finance social security and its taxable event is the calculation of net profit, based on accounting profit, of legal entities domiciled in the country or equivalent, with the exception of non-profit Entities. It is estimated that with the creation of Law 14,446/22, the tax collection will have an increase of BRL 244 million.  

Criticism: 

In 2021, the CSLL tax rate for banks was also increased: it rose from 20% to 25% to reduce diesel and cooking gas prices. Now, again, this contribution will be increased by one percentage point, from 20% to 21%, until the end of the year, in order to rebalance the Federal Government’s budget.  

However, because it is a social contribution, i.e., a tax that constitutionally has its purpose defined, one must pay attention to whether these changes respect its features.