March 22, 21 - 5:01 pm - Reuters

Brazil’s federal tax revenue rises to record $23 billion; COVID second wave may take its toll by April

Brazil‘s federal tax revenue rose in February to its highest on record for that month, the revenue service said on Monday, boosted by strong growth in corporate taxes and firms’ social contributions on net profits.

The tax take last month totaled BRL 127.75 billion ($23 billion), up 4.3% in real terms from the same month last year and slightly more than the BRL 124.9 billion median forecast in a Reuters poll of economists.

It took the total tax take for the first two months of 2021 to BRL 308 billion, up 0.8% in real terms from a year ago, just before the onset of the COVID-19 pandemic, and also the highest since the data series began in 2000, the revenue service said.

Economy Minister Paulo Guedes had said in recent days that the Jan-Feb total would be higher than last year, an indication of the strength of Brazil’s economic recovery from the worst of the crisis in April-May last year.

In an online address, Guedes said the strong start to the year continued into the first half of March. But he warned that the surging second wave of the COVID-19 pandemic in Brazil will take its toll on economic activity and tax revenues.

“It is obvious that we will probably suffer some impact in the April, the second half of March and April,” Guedes said.

“This is why mass vaccination has to be accelerated as quickly as possible, to guarantee people’s survival and safe return to work, especially the most vulnerable classes,” he said.

Corporate income taxes and company social contributions on profits in February totaled 24 billion reais, the revenue service said, up 40% in real terms from the same month last year.

Payments into the social contribution fund known as “PIS/Pasep” and the “Cofins” social security levy rose 2.2% in real terms to 27.1 billion reais in February, the revenue service said.