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LatinNews Daily - 26 January 2021

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In brief: Brazil’s 2020 tax take tumbles

* The secretariat of the Receita Federal, Brazil's tax authority, has reported that the federal government’s tax revenue totalled R$1.479trn (US$270.6bn) in 2020. This represents a 3.75% decrease on the 2019 tax take in real terms, and a 6.91% drop after adjustment for inflation. The fall in the federal tax take can be explained by several factors, stemming from the economic crisis brought about by the coronavirus (Covid-19) pandemic and the measures taken to mitigate it. A drop in industrial production, retail sales and services led to a concomitant fall in government revenue from related taxes, such as the IPI tax on industrialised products. Tax deferments in the early months of the pandemic, R$62.1bn worth of tax rebates after businesses earned less than initially predicted, and the zeroing during eight months of the tax on financial operations (IOF) for credit operations all contributed to the decrease in the federal government’s tax revenue. Ever bullish, Economy Minister Paulo Guedes declared the tax take an “excellent result” and a sign that the economy, and government revenue from taxes, had begun to recover in the last months of 2020.