Will Brazil Finally Tax Dividend Income?

Abstract

In 1995, Brazil began allowing corporations to deduct distributed earnings and profits from income while also exempting dividends from taxation at the shareholder level. Over the past three decades, elected officials from across the political spectrum have sought without success to change that system, which critics claim unfairly rewards taxpayers at the top of the income pyramid. Paulo Costa explains why, facing economic headwinds and government coffers depleted by the COVID-19 pandemic, the new government of President Lula might finally succeed.