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LATIN AMERICA ADVISOR

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

March 28, 2025

What Will Proposed Tax Changes Mean for Brazilians?

Brazil’s president is seeking a new tax on corporate profits and dividends sent abroad. São Paulo is pictured. // File Photo: Igor via Adobe Stock.

Q

  • Brazilian President Luiz Inácio Lula da Silva on March 18 proposed a 10 percent tax on corporate profits and dividends sent abroad to offset new tax exemptions for low-income citizens. Last year, total profits and dividends sent abroad from Brazil amounted to almost $70 billion. The government expects that the expansion of tax exemptions for citizens who earn up to around $875 per month would have a fiscal impact of $4.5 billion in 2026, Reuters reported. What effects will these changes in Brazil’s tax code have on the country’s fiscal and macroeconomic stability? How will the plan to tax profits and dividends sent abroad affect foreign investment in Brazil, or cause companies to reconsider existing investments?

A

Jacqueline Pitanguy, executive director of Citizenship, Study, Research, Information and Action (CEPIA) in Brazil and a member of the Inter-American Dialogue: “One of the main characteristics of Brazil, the world’s 10th-largest economy, is its social inequality that responds to a number of different factors, among which is the tax collection service. Those who earn less pay proportionately more taxes than those who earn more. The system has to be corrected in both ways. The government has proposed to abolish tax payments for citizens who earn up to 5,000 reais ($900) a month. It seems that Congress will approve this part of the proposal since, from extreme right to the left, lawmakers don’t want to appear to their voters as being against more social equality, especially since 2026 is an election year. The problem is on the other end of the equation. The legislation that the government presented proposes to tax more heavily those who…”

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