Brazil tax collection down 28.9% in April to $17.756 bi

Amid the COVID-19 pandemic, the collection of federal revenues in Brazil saw a 28.95 percent reduction in April, reaching $17.756 billion. The comparison is drawn with the same month in 2019, inflation deducted. This is the lowest value for the month since 2006’s $16.87 billion. The figures were released today (May 21) by the Federal Revenue.

The revenues administered by the Federal Revenue, like taxes and federal contributions, totaled $16.383, resulting in a real reduction (inflation deducted) of 28.79%.

The revenues administered by other agencies, in turn, especially oil royalties, added up to $1.373 billion, down 30.75 percent from April 2019.

From January to April, the total collection amounted to $88.171 billion, with a real decline of 7.35 percent from the same period last year. The revenues administered by the Federal Revenue were reported at $83.698 billion, down 7.71 percent.

Revenues managed by other agencies totaled $4.473 billion, with a real decline of 2.18 percent.

Pandemic

According to the Federal Revenue, the result of the month and the year-to-date amount was “significantly influenced” by the measures aimed at tackling the effects of the COVID-19 pandemic. The Federal Revenue mentions the tax payment deferrals, which added up to $6.265 billion in April and tax compensations, which increased 25.19 percent last month and 46.91 percent year to date. These compensations totaled $1.945 billion last month and $8.210 billion in the four months of the year.

Claudemir Malaquias, head of the Federal Revenue’s Center for Tax and Customs Studies, the growth in tax compensation comes as a result of the need of companies’ liquidity (available resources).

“Companies lose their revenues, lose liquidity, and start availing themselves of their credit right making tax compensations. These rights were acquired in the past. Companies have this in their bookkeeping and may use it when they deem fit. After the introduction of social distancing measures, a slowdown in the economy as well as revenues, companies turned to compensations more often,” he said.

Losses

The Federal Revenue estimated the collection of administered revenues to total $24.277 billion in April. As a result of the pandemic, this amount stood at $16.66 billion.

Of the $7.818 billion difference between the forecast and the value actually collected, most derive from tax deferrals (81.5%), the reduction in the IOF (Tax on Financial Operations) rate (3.6%), the increase in tax compensations (5.1%), and the effects of the economic slowdown (9.8%).