Lula's government decides to impose minimum tax on wealthy Brazilians

The idea is to use the tax to finance an increase in the income tax exemption to $896.

The Ministry of Finance is working on establishing a minimum personal tax to ensure that the income of Brazil's wealthy is effectively taxed.

Discussions on the issue were conducted cautiously within Minister Fernando Haddad's group as a possible response to the financing of an increase in the IRPF (personal income) tax exemption to 5,000 reais ($896).

The correction of the tax schedule is a promise of President Lula. The current tax exemption is twice the minimum wage (R$2,824).

The minimum tax rate for the rich will be set at between 12% and 15% of income.

The tax system works like this: A minimum tax is applied to an individual's total income (including income, wages, profits, and dividends) and compared to the amount of tax the individual would pay under the current system.

If the result is lower, the taxpayer would have to pay the difference in the IRPF adjustmen

This could be another way for wealthy Brazilians to tax their income, including dividends and dividends distributed to shareholders, without paying income taxes.

In Brazil, the higher the personal income, the lower the need to pay taxes. This is called the regressive nature of the Brazilian tax system.