2023 Income Tax: check out what is new for this year

Announced as one of the major changes, the pre-filled return retrieves information to be filled out automatically, showing the Revenue Service's potential in data crossing

By Augusto Andrade

On February 28, the Federal Revenue Service of Brazil (RFB) published Normative Instruction No. 2,134 , issuing new rules for filing the 2023 income tax return. This year, taxpayers will have between March 15 and May 31 to submit information pertaining to 2022.

Major changes include a new pre-filled return, which taxpayers can use to retrieve information from other sources so as to automatically fill out the statement. According to the agency, this is expected to make them easier to prepare and will prevent errors that could potentially lead to a tax audit.

Conversely, the novelty also demonstrates the Revenue Service’s capacity to crosscheck information with other declarations and financial institutions, hence taxpayers should be extra careful when providing their data. The fact that some information can be filled out automatically does not mean that taxpayers are exempt from filing their income tax returns.

Check out below some of the changes and points of attention:

Submission schedule

From 2023 onwards, submissions must be made between March 15 and May 31.

The program used for filling out the statement will be made available as of March 15.

Who is required to declare?

Individual taxpayers with tax residence in Brazil are required to file the declaration, if they:

• received taxable income, subject to the annual tax return, whose sum was greater than BRL 28,559.70;
• received income deemed nontaxable, tax free, or taxed exclusively at source, greater than BRL 40,000;
• received, in any month, capital gains from selling taxable assets or rights;
• carried out sales transactions on commodities/stock exchanges, futures market and the like, provided that:

a) the sum of such transactions exceeded BRL 40,000; or

b) net gains arising from such transactions were taxable;

• with respect to rural activities:

a) obtained gross revenue greater than BRL 142,798.50; or

b) intend to offset losses from 2022 or prior years.

• on December 31, held or possessed assets or rights, including the ownership of bare land, whose total value exceeded BRL 300 thousand;
• were granted the status of tax resident in Brazil by December 31; or
• opted to be relieved from income tax levied on capital gains earned on the sale of residential real estate, provided that the sale proceeds will be used in the purchase of another residential property located in Brazil, within 180 days as of the agreement’s signing, pursuant to article 39 of Law No. 11,196/2005.



One very important change is that individuals who carried out transactions on the commodities or stock exchanges, futures market and the like, under BRL 40,000 or which did not yield taxable net gains are now exempt from filing the declaration.




Income Tax brackets for 2023

With no adjustments since 2015, the annual Income Tax brackets are the following:




Income Tax base
Tax base (BRL)	Rates (%)	Portion deducible from Individual’s Income Tax (BRL)
Up to 22,847.76	-	-
De 22,847.77 to 33,919.80	7,5	1,713.58
De 33,919.81 to 45,012.60	15	4,257.57
De 45,012.61 to 55,976.16	22,5	7,633.51
55,976.16 and above	27,5	10,432.32




In a recent note, the Brazilian Federal Revenue Service announced that taxpayers earning up to BRL 2,640.00 will be exempt from the income tax – and will not be required to pay it neither at source nor via the annual tax return. Those earning beyond this amount will be subject to pay the excess. These rules, however, will only be effective from 2024 onwards.

Thus, for 2023 the exemption limit of BRL 1,903.98 should still be observed, in addition to the table above.




Pre-filled return

Since last year it was already possible to retrieve information related to an individual’s identity, address, receipt number, dependents, withholding agents, assets and rights, income and payments reported in several declarations, such as the DIRF, DIMOB, DMED, “Carnê-Leão” and contributions made to private retirement plans declared via the e-Financeira.

Now, in addition to these, the following information will also be retrieved:

• Real estate purchased and registered in a notary's office, declared via the DOI (Real Estate Transactions);
• Donations made in the year declared via the DBF (Tax Benefits Statement);
• Inclusion of cryptocurrencies declared by exchanges;
• Balance update on 12/31/2022 of banking and investment accounts;
• Inclusion of banking accounts or investment funds that are either new or had not been declared in 2022;
• Earnings arising from refunds received in the calendar year.



As in previous years, the pre-filled return is a valid option only for those with gold or silver level gov.br accounts.




It should be noted that taxpayers must double-check all imported data, as they are responsible for making the necessary rectifications. Therefore, one should make a thorough assessment of the balances and transactions carried out during the year before making a validation. For doing this, counting on specialized consulting services is key in order to find potential inconsistencies between the source documents and the pre-filled returns, and also to take the necessary actions, which includes reviewing the information sources.




Refund calendar




In 2023, income tax refunds will be paid in five batches:




1st batch	2nd batch	3rd batch	4st batch	5th batch
May 31	June 30	July 31	August 31	September 29




The order of the refunds will follow the date the tax return was filed, keeping in mind that legal priority will be given to the following taxpayers: those over 80 years of age, those 60 years of age or older, people with physical disabilities or serious illnesses, and teachers whose main source of income is in education institutions.

A new priority will be given to taxpayers who use the pre-filled return and/or choose to be refunded via Pix (Brazilian instant payment platform).




Fines




Those who do not submit their tax returns on time or fail to do so whatsoever are subject to fines ranging from BRL 165.74 to 20% of the income tax due.




2023 Income Tax: compliance and best practices




DPC has a department focused on assisting individuals in filling out their Income Tax returns in full compliance with the rules in force.

We adopt best practices to account for complex and unique situations, such as variable income, assets held overseas and yields arising from offshore companies etc. You can rely on DPC's support: dpc@dpc.com.br.