Post by account_disabled on Feb 19, 2024 1:18:53 GMT -5
Equity was created. Mechanism that, by allowing companies with a greater share of equity (net equity) to settle part of the inflationary cost of maintaining this capital — measured, as provided for in the aforementioned article 9, respecting the “pro rata day” limitation of the Interest Rate of Long Term (TJLP) — obtain results on an equal footing with those that capitalize on third-party resources.
The second of them, cumulative to the first, essentially “ legal” , was well explained by professor Luis Eduardo Schoueri in his article “ Interest on equity: Legal nature and method of calculation in light of the new accounting”. On that occasion, the professor drew attention to the fact that, based on the aforementioned Law No. 9,249, of December 26, 1995, “ dividends paid by Brazilian companies to their partners or shareholders, individuals or legal entities resident or not in the country, they became non-taxable income” .
This measure, according to item 12 of the explanatory Telegram Number Data memorandum of Law No. 9,249, of December 26, 1995, had as its objective “ the complete integration between the natural person and the legal entity, taxing these income exclusively in the company and exempting them upon receipt by the beneficiaries” . However, considering that double taxation, in the calculation and distribution of results, no longer exists, one of the effects brought by this exemption was the stimulus to the wide distribution of results — a phenomenon that could drag companies into a scenario of undercapitalization .
Problem with interest rates x high inflation
In this area, interest on equity would emerge as a “ creative expedient to avoid thin capitalization”. After all, “ interest on equity is intended to allow the partner or shareholder to receive an income equivalent to what they would receive if they sought another long-term financial investment” ; however, they do so in a way that allows these amounts to be deductible when calculating taxable profit and, at the same time, the maintenance of equity capital in society is encouraged.
After all, “ law no. 9,249/1995 conditions the payment of interest to the existence of profit recorded in the period or accumulated profits in an amount equal to or greater than twice the amount that will be paid as interest on equity” . And, as the professor concludes:
“Thus, in accordance with the discipline of article 9 of Law No. 9,249/1995, the company pays remuneration to its shareholders and recognizes the amount as a deductible expense, deducting it from its taxable profit. At the same time, such amounts are subject to withholding tax, at the time of payment to the shareholder, at a rate of 15%. The capitalization of companies through loans, or subcapitalization, is therefore discouraged, as it is not necessary to achieve deductibility of payments to partners.”
Although part of the doctrine interprets the paths as alternatives, it seems that both address the same problem: encouraging the decapitalization of companies or their capitalization through third-party resources. Practices that, in a country marked by low average factor productivity and a constant dispute between high interest rates or inflation, could have truly harmful effects on the country's economic efficiency and, especially, its growth capacity.
The second of them, cumulative to the first, essentially “ legal” , was well explained by professor Luis Eduardo Schoueri in his article “ Interest on equity: Legal nature and method of calculation in light of the new accounting”. On that occasion, the professor drew attention to the fact that, based on the aforementioned Law No. 9,249, of December 26, 1995, “ dividends paid by Brazilian companies to their partners or shareholders, individuals or legal entities resident or not in the country, they became non-taxable income” .
This measure, according to item 12 of the explanatory Telegram Number Data memorandum of Law No. 9,249, of December 26, 1995, had as its objective “ the complete integration between the natural person and the legal entity, taxing these income exclusively in the company and exempting them upon receipt by the beneficiaries” . However, considering that double taxation, in the calculation and distribution of results, no longer exists, one of the effects brought by this exemption was the stimulus to the wide distribution of results — a phenomenon that could drag companies into a scenario of undercapitalization .
Problem with interest rates x high inflation
In this area, interest on equity would emerge as a “ creative expedient to avoid thin capitalization”. After all, “ interest on equity is intended to allow the partner or shareholder to receive an income equivalent to what they would receive if they sought another long-term financial investment” ; however, they do so in a way that allows these amounts to be deductible when calculating taxable profit and, at the same time, the maintenance of equity capital in society is encouraged.
After all, “ law no. 9,249/1995 conditions the payment of interest to the existence of profit recorded in the period or accumulated profits in an amount equal to or greater than twice the amount that will be paid as interest on equity” . And, as the professor concludes:
“Thus, in accordance with the discipline of article 9 of Law No. 9,249/1995, the company pays remuneration to its shareholders and recognizes the amount as a deductible expense, deducting it from its taxable profit. At the same time, such amounts are subject to withholding tax, at the time of payment to the shareholder, at a rate of 15%. The capitalization of companies through loans, or subcapitalization, is therefore discouraged, as it is not necessary to achieve deductibility of payments to partners.”
Although part of the doctrine interprets the paths as alternatives, it seems that both address the same problem: encouraging the decapitalization of companies or their capitalization through third-party resources. Practices that, in a country marked by low average factor productivity and a constant dispute between high interest rates or inflation, could have truly harmful effects on the country's economic efficiency and, especially, its growth capacity.