Brazil tax amnesty plan may struggle to lure back offshore assets

jueves 6 de agosto de 2015 09:45 GYT

By Anthony Boadle and Guillermo Parra-Bernal

BRASILIA/SAO PAULO Aug 6 (Reuters) - Desperate to fix a fiscal crunch threatening its investment grade credit rating, Brazil is aiming to lure back some of an estimated $150 billion in unreported assets held abroad in tax havens and secret bank accounts.

The cash-strapped government is looking to raise 10 billion reais ($3 billion) this year by offering an amnesty from prosecution to Brazilians who have unreported assets outside the country.

The bill, expected to go to a Senate vote this month, would allow beneficiaries to come clean on two conditions - that they disclose the origins of the funds and pay a 35 percent penalty.

That might, however, be too ambitious and it could backfire.

"It's going to be a major flop. A lot of Brazilians would like to clean up the ledger, but 35 percent is too high, the government is crazy," said a retired top executive of a foreign bank in Brazil who asked not to be named.

Then there's the tough sell of bringing funds back into Latin America's largest economy just as it faces its worst recession in 25 years, wealth managers say.

"In theory, the move would have been welcomed but the timing isn't good," said Deiwes Rubira, who manages 1 billion reais in client assets at multi-family office Verus Gestão de Patrimonio. "There's so much political and market noise at the moment that it could frustrate a healthy initiative like this."

Brazil is reeling from high inflation and its currency has sunk to a 12-year low against the dollar. On top of that, uncertainty set off by a huge corruption scandal involving contracts with state-run companies is likely to put off the economic recovery for at least two years, bankers said.   Continuación...