Brazil will tax coronavirus emergency aid payments

Brazil will tax coronavirus emergency aid payments

The beginning of the 2021 tax filing season caught Brazilians off-guard, as many found out that last year’s Covid-19 emergency aid benefits will qualify as taxable income and should be paid back in full by April 30. Otherwise, recipients risk becoming indebted to the government. 

The measure applies to workers whose annual income without aid payments surpassed BRL 22,800 (USD 4,000), comprising roughly 3 million of the 68.2 million beneficiaries, according to the Federal Revenue Service. Taxpayers will not have to pay back benefit payments made in the last three months of 2020, when the government extended the program. However, if a taxpayer’s dependent also received the aid, the money should be declared and returned.  

Many Brazilians were surprised by the news, as social isolation restrictions are reinstated amid another deadly coronavirus wave. According to accountant Giovana Russo, most of her customers who received the emergency aid are not in a position to return a lump sum of BRL 3,000 by April 30. 

“The government gave no alternative to the taxpayer. Entrepreneurs were already going through a hard time last year, now this will break people’s legs,” she told The Brazilian Report

As news website UOL reports, the decision may backfire, with people looking for ways to avoid the repaying emergency aid, such as not declaring dependents. According to the Federal Revenue Service, 2.5 million tax returns have been submitted so far. The deadline for income tax declarations runs until April 30.

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