The repatriation program introduced in 2016 that allowed Brazilians to legalize their formerly undeclared foreign assets in Brazil will be renewed in 2017. Law 13.428/17 was passed by congress and then signed by President Temer in March of this year.
The first repatriation round yielded higher returns than the government expected. Last year, 170 billion reais were declared vis-à-vis the program, of which the Receita Federal (Brazil’s IRS) levied 46.8 billion in taxes and fines.
In November of last year, the Senate passed a bill extending the deadline for Brazilians wishing to repatriate their money by 120 days. Now, the Secretary of the Receita Federal has announced new regulations for this year’s repatriation program.
In addition to some other modifications, this year’s participants will pay a tax of 15 percent and a fine of 20.25 percent, bringing the total to 35.25 percent of declared assets. This is an increase from last year’s 30 percent. The exchange rate has also gone up. Participants in this year’s program will be using the rate of exchange from June 30, 2016 (3.21 reais) while participants in last year’s program used the end of 2014’s exchange rate of 2.66 reais.
An expected 13 billion reais will be gained by this year’s program. Forty-six percent of the money collected from fines will be given to federal, state, and municipal governments. This is a change from the first program, which saw only the federal and state governments receiving the tax.
Though the repatriation program has injected much-needed cash into government channels that have been struggling to survive a crippling recession, not everyone approves of the measure. For some, like federal prosecutor Douglas Fischer, the process makes it easy for Brazilians to legalize money gained illegally: “The repatriation bill is a money laundering bill. It is shameful because it fosters impunity from serious crimes.”
In 2016, the program provided amnesty to those willing to bring their money into Brazil. This regulation passed just when Brazil was falling under the tidal wave of corruption scandals that brought down the president and several high-ranking officials. Many federal prosecutors were fiercely opposed to the granting of amnesty as it hindered their investigations of bribes and kickbacks kept in foreign accounts. This year’s repatriation program will continue the amnesty, granting full pardon for crimes.
Participants will be permitted to repatriate income earned up to June 30, 2016. The deadline for submitting the DERCAT (Declaration of Exchange and Tax Regularization) and paying both the tax and the fine is July 31, 2017.