MP increases equity interest income tax to 18%

The government increased the Income Tax rate from 15% to 18% on interest on own capital (JCP) paid to holders, partners or shareholders of companies.

The decision is contained in Provisional Measure 694, published in an extraordinary edition of yesterday's Official Gazette (DOU).

The change will take effect from January 1, 2016.

The measure also limits the deduction, as modified from the original wording: The legal entity may deduct, for the purposes of calculating the actual profit, the interest paid or credited individually to the holder, partners or shareholders, as remuneration of equity , calculated on equity accounts and limited, pro rata die, to the Long Term Interest Rate - TJLP or to five percent per year, whichever is less.