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On October 3, 2024, Brazil introduced Provisional Measure No. 1,262, aligning its tax regulations with the OECD’s Global Anti-Base Erosion (GloBE) Rules. This is part of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS), which establishes a minimum effective tax rate (ETR) of 15% for large multinational enterprises (MNEs).
Adoption of a 15% Minimum ETR: The legislation introduces an additional Social Contribution on Net Income (CSLL) to ensure that MNEs operating in Brazil meet the 15% minimum effective tax rate on global profits, as required by the OECD’s GloBE rules.
Taxes are a crucial part of funding public services, but many people wonder if they’re paying more than necessary. Various factors can lead to higher-than-necessary tax bills, including missed deductions, lack of knowledge about credits, and ineffective tax planning. Here are some key areas to consider that may help reduce your tax burden:
Tax Deductions and Credits: A lack of awareness of available deductions and credits is one of the biggest factors causing people to overpay. Tax deductions reduce your taxable income, while credits reduce the actual amount of tax owed. Some common but often missed credits include the Earned Income Tax Credit (for lower-income households) and education credits like the American Opportunity Credit.
Tax-Deferred Accounts: Retirement accounts like IRAs and 401(k)s allow tax-deferred contributions, which reduce taxable income in the year you contribute. However, only about half of workers fully utilize these accounts, leaving potential savings on the table.
Investment Taxes: Capital gains taxes on investments can also cost you if not managed properly. Strategies like tax-loss harvesting, where you sell investments at a loss to offset gains, can help reduce what you owe. Long-term capital gains (on assets held for over a year) are typically taxed at a lower rate than short-term gains, so holding investments longer could help.
State and Local Taxes: Many people forget to review their state and local tax obligations. Each state has its own rules, and sometimes income shifting or residence planning can lead to significant savings. For example, retirees often choose states with no income tax to reduce their post-retirement tax burden.
Seeking Professional Help: Tax laws change frequently, and using a tax professional or financial advisor can help ensure that you’re taking full advantage of available strategies. They can provide insights into lesser-known tax strategies and updates, like recent changes in standard deductions or credits in the Tax Cuts and Jobs Act.
