CPMF Tax come back ?

Unfortunately the article's author Michael Royster seems to be a bit misinformed about the proposed resrrected CPMF.

It is not just a tax on all withdrawals, but rather a tax on ALL FINANCIAL TRANSACTIONS, with the single exception that your employer doesn't have to pay the tax when depositing your salary.

On everything else you do at a bank you will pay the CPMF. That means when you withdraw money that you've already paid income taxes on, or pay your utility bills (either online or in person) on top of the copious other taxes already levied on those bills, pay your credit card, transfer funds between accounts, deposit to other accounts, etc., etc., etc. So much for the concept of "double taxation", that simply doesn't exist in Brazil.... if they can tax you 6 or 7 times on the same money they still wouldn't be satisfied.

Unfortunately, creating new taxes is the Brazilian government's only answer to everything. They haven't grasped the basic idea that the average Brazilian is taxed to the absolute limit and you can't get blood from a stone. The only thing that keeps the government, in its arrogance, from simply printing more currency (like the Fed is so quick to do in the USA) in response to the financial crisis is the fact that they're painfully aware that the consequences would be simply to further devalue the Real.

Meanwhile the inflated bureaucratic machine called government in this country costs over R$413 billion each year, or fully 1/3 of the country's Gross Domestic Product. God forbid that they should ever think to take a minimal cut in their "super-salaries", or cut out some of the enormous other allowances they receive on top of their salary. Or maybe they should start cutting the fat, getting rid of the phantom employees who only exist on paper so their supervisors or politicians can siphon off even more public funds. Hell, if they did either of these things they could cover all of the shortfall of the budget "pedaladas" without ever creating another tax.

While my own income (Canada Pension Plan benefits) is not taxable here in Brazil due to the fact that I'm not naturalized as a Brazilian citizen, thus exempt under the Canada/Brazil Tax Treaty; I'm madder than a wet hen that with each passing day I'm paying more and more taxes on that meager income when I spend it here in Brazil. Paying taxes on absolutely everything I buy (including food), becomes more and more a burden all of the time. I can only imagine how it must piss off Brazilians who must also pay income taxes on top of all that.

Unfortunately the "gravy train" passes directly through Brasília and that train is out of control.

Cheers,
James
expat.com Experts Team

"Printing Money" is a way of controlling certain economic situations. Brasils answer to all financial problems is tax. tax. tax, 

I am surprized to learn that your canada has such close ties to Brasil. How did you guys pull that off and is it more that the tax thing?

James: When people living in Brazil full time (Canadians, Americans, etc.) transfer money from their accounts in their home country either via ATM withdrawal or transfer from a Canadian/US/etc. account to a Brazilian bank account, do they pay taxes on that amount?

In other words, assuming a person receives US$ 80,000 a year from pension, social security, etc. from their original country, they pay the Brazilian Income tax on that amount, then they begin transferring it to Brazil to pay their bills. Do they again pay taxes on the money they bring into Brazil even though they had already paid on the full amount of $80,000?

Thanks.

Hi ndfansince53,

First of all, if someone is applying for a VIPER Permanent Visa, based on retirement they are required to set up a Brazilian bank account and have those funds, USD $2000 per month (retiree and up to 2 dependents), plus USD $1000 per month for each additional dependent transfered. So the CPMF would be charged on ALL transactions. As if that isn't bad enough you would also be required to pay yet another tax on the transfer of funds into the account from abroad (international transfer) the IOF - Imposto sobre Operações Financeiras, which is 3.8% of the value of the transaction.

You are NOT required to transfer all of your pension to the Brazilian account, just the minimum required amount, and I'm sure that your US bank will gladly arrange to transfer ONLY that amount automatically each month. The legislations for the VIPER application itself only requires that the US bank confirm your ability to transfer that amount, you must set up the account upon arrival.

NOTE: Neither the CPMF or IOF have anything at all to do with one's income taxes, they are charged OVER AND ABOVE income taxes for both Brazilians and expats.

For US citizens it's complicated, since there is no bilateral Tax Treaty between the USA and Brazil.

You will be required to file your annual 1040 Income tax in the USA and pay tax on your pension. 

As a permanent resident of Brazil you will also be required to file a DIRF - Declaração de Impostos de Renda Pessoa Física each year and you will need to report your pension income (all of it, not just what was transfered) as world income. You may or may not end up taxed on that in Brazil as well that's completely up to the Receita Federal as there is no Treaty. If you are taxed in Brazil you may qualify for a reduction of taxes payable on your US return, I don't know how your tax laws work.

You WILL NOT be charged CPMF or IOF on any ATM withdrawals
You WILL be charged CPMP and IOF on any transfers/deposits to your Brazilian account from abroad.
You WILL be chared CPMF on any and all transactions you make on your Brazilian account, paying bills, withdrawals, cheques, transfers, etc.

I'm quite fortunate, being a Canadian and in that I got permanency based on a Brazilian child and not retirement. Canada and Brazil have a bilateral Tax Treaty and it is clearly stated that my pension income is taxable only in Canada unless I naturalize as a Brazilian citizen and only then taxable in Brazil. I clearly would not naturalize for that and a whole host of other reasons. My pension is NOT transfered to a Brazilian account and I don't have one. I withdraw those funds from an ATM here and thus I do not pay IOF, won't need to pay CPMF if it comes back in either. Since my "income" is not taxable in Brazil I don't need to file a DIRF either because I fall under the exempted taxable income minimum.

Cheers,
James
expat.com Experts Team

I live in a beach town in the Lakes Region. Many Cariocas and Paulistas of means have summer vacation homes here. There are also many empty lots with overgrown vegetation. When a vacation homeowner decides to do a renovation they hire a contractor. The contractor directs labors to disburse all the demolition and construction refuse in these empty lots. The contractor cuts his overhead because he doesnt have to pay refuse costs. Concrete, plastic, used televisions and furniture all go to Ziikalandia! The Prefeitura has to come in every few months paying for a skiploader with operator, dump truck with driver and two laborers to clean up the blight. No one in the neighborhood forms any resistance as all live in walled condominios, and dont have to view the trash out there front windows.
A people deserve the taxes they get..............