Brazil Financial New Tax Bill

In March 2025, the Lula Administration introduced Bill No. 1,087/2025. The measure is mainly aimed at taxing dividends for individuals inside Brazil, but it also proposes a 10% tax on dividends paid to foreign shareholders. For U.S. firms, this means that profits generated in Brazil and sent back to the United States could be taxed before leaving the country.

• The proposal also sets a ceiling on overall business taxation.
• Most companies would face a maximum combined tax burden of 34%.

For banks and financial services, the cap could be as high as 45%.

If approved, the new rules would take effect January 1, 2026. Some analysts warn that dividends distributed in 2026 could be taxed even if the profits were earned in earlier years.

Why it Matters

• U.S. companies could see reduced earnings from their Brazilian operations.
• The change would make profit repatriation more expensive, affecting cash flow and investment decisions.
• Companies may need to revisit financial planning around how and when they distribute profits.

Next Steps

The bill still needs to move through Brazil’s Congress and could be revised. Given the potential impact, U.S. firms should begin reviewing their exposure and seek local tax expertise.

Contact for Assistance

For additional information and introductions to tax professionals in Brazil, please contact Denise Barbosa, Commercial Specialist, U.S. Consulate São Paulo, at denise.barbosa@trade.gov.