RIO DE JANEIRO, BRAZIL – The Ministry of Economy has defined a proposal to tax dividends greater than R$240,000 (US$47,000) per year at 20%.
Minister Paulo Guedes’ team is now reviewing the dividend tax proposal at the request of the Planalto Palace to include the exempt amoung in the draft.
At present, this form of profit distribution is completely tax-exempt. Originally, the economic team worked with a tax rate of 15% without any exemption, but there were already considerations to increase it to 20%. With the idea of an exemption amount, the higher tax rate gained strength.
The levy on dividends is intended to finance the reduction of the corporate income tax (IRPJ) by five percentage points, from 25% to 20%.
It should also help finance the readjustment of the tax brackets of the individual income tax (IRPF), where the first R$2,400 per month will be exempt from tax, almost double the exemption from last year.
The reform proposal will now be considered by the Presidential Palace, which must also decide on the timing of the bill.
The Speaker of the House, Arthur Lira (PP-AL), said last week that he expected the text to be sent to members on Wednesday this week. However, the government has not yet publicly committed to that date.
Source: Poder360