Brazilian President Dilma Rousseff on Thursday signed a bill that gives amnesty to holders of undeclared offshore assets in exchange for a fine, part of efforts to cut a swelling budget gap and revive investment in the recession-hit economy. The law offers amnesty from prosecution to Brazilians if they bring unreported foreign funds home and pay a 30 percent fine in the form of tax.
When the bill was approved in the Senate late last year, government officials said it could help raise about 11 billion Reais ($2.74 billion) in revenues. Rousseff vetoed parts of the bill, including one that steered part of the collected fines to regional governments. She also shunned a proposal to include jewelry, precious stones, artwork and antiques from the program while barring a proposal to allow payment of fines in installments.
The bill had been criticized for being too lenient on tax dodgers. Critics said it facilitates money laundering stemming from a corruption scandal at state-controlled firms, in which millions of Reais were siphoned into secret accounts of ruling coalition politicians and business executives in Switzerland and offshore financial havens.
Officials are hoping that the law, coupled with growing international cooperation, will further deter tax evaders. Last July, Brazil's Congress ratified an agreement to exchange tax information with the United States.
Even with the amnesty, Rousseff will struggle to reverse the country's budget deficit as the economy braces for the longest and deepest recession since 1901. The government targets a budget surplus before debt payments equivalent to 0.5% of GDP this year, although economists predict a 1% of GDP shortfall.