CPMF stands for Provisional Contribution on Financial Transactions, a tax levied on all financial transactions made by legal entities and individuals .This tax was levied on taxpayers’ bank transactions and was in force between 1996 and 2007. The initial rate was 0.25%, increasing to 0.38% in 2002.The CPMF was created to raise funds for Public Health, during the government of former President Fernando Henrique Cardoso, through Constitutional Amendment No. 12, August 16, 1996.
It was a federal tax managed by the IRS, with the proposal of being a provisional contribution, which would end when government accounts were balanced.After many controversies about the continuation or not of the collection of this tax, in December 2007 the Brazilian Senate rejected the proposal for extension. The collection of CPMF was officially extinguished on January 1, 2008.
Also in 2008, there was a proposal to create a new CPMF, named Social Contribution for Health (CSS), a tribute created by Complementary Law Project 306/08.On September 21, 2011, the House of Representatives rejected the proposal that it followed for analysis by the Senate.In 2015, the idea of redeploying the CPMF was once again debated, this time to help cover the Social Security gap. The proposal is to charge 0.2% of all financial transactions made by individuals and legal entities.
How it works
The CPMF is considered a very unpopular action, since the contribution is directly withdrawn from the person’s money, either when they make a withdrawal from the bank, pay an account or transfer to another bank account.For example, when someone makes a transfer in the amount of R $ 1,000.00 (one thousand reais), it would be charged the amount of R $ 2 (two reais) of CPMF, considering the rate of 0.2%.As the name suggests, the Provisional Contribution on Financial Transactions is a temporary tax, with an average duration of four years, and can be extended for longer, as has happened in the past.