The MP, which will still be analyzed by the National Congress, reduces the income tax at source levied on payment, credit, delivery, employment or remittance transactions, by a source located in Brazil, to a legal entity domiciled abroad, as consideration for a commercial lease agreement for an aircraft or engines intended for aircraft, entered into by a regular public air transport company, for passengers or cargo, with entities domiciled abroad, until the end of 2026.
The measure provides for the reduction of the applicable rate, which is currently 15%, to zero over the next two years, and from 2024 onwards a gradual increase of 1% per year, resulting in the following percentages:
2022 - 0%
2023 - 0%
2024 - 1%
2025 - 2%
2026 - 3%
When issuing the Provisional Measure, the Federal Government argued that the current tax rate was negatively impacting tourism operations, increasing costs and hindering the airline industry's recovery from the pandemic. If approved, the Executive Branch states that it hopes to reduce travel costs and boost tourism.
According to the Federal Government, the measure will represent a tax waiver of R$374 million for 2022; R$382 million for 2023; R$378 million for 2024; R$371 million for 2025; and R$158 million for 2026.
The measure, which came into effect on January 1, 2022, must be approved by the Chamber of Deputies and the Senate within 120 days, otherwise it will lose its validity.
