Gustavo Brigagão, from FGV, argues that project encourages informality and makes taxation complex
Gustavo André Muller Brigagão, Professor of Tax Law at FGV (Getulio Vargas Foundation), said this Thursday (20.MAI.2025), in session in the House, that Taxar Dividendos is a “Obvious discouragement of investments”. He argues that if the tax payer finds that there is surcharge, he will leave the formality and seek other means.
Dividends are a small portion of the company’s profit that is distributed to shareholders as a form of remuneration. Currently, the amount is exempt from income tax.
“What are the problems with the taxation of dividends? An obvious discouragement of investments. All investments are made on the assumption that the results of these investments will be exempt. It is the advantage of concentrating taxation in the legal entity. This is not an exemption ”said brigagon.
Brigagão participates in a session on the bill that increases from R $ 3,036 to R $ 5,000 the IRPF (Individual Income Tax) exemption range. According to Brigagão, the measure is beneficial and highlights the need for the poor to have a “more appropriate treatment ”. He criticized, however, the taxation on dividends.
The IRS will charge any income from Brazilians over R $ 50,000 per month, which will also impact dividend gains. “It is nothing more than a revocation of dividends”declared the teacher. Beyond the complexity of verifying the taxes, said that there will be a “disguised distribution of profits ”.
And added: “The DDL (disguised distribution of profits) ended in the 90s and now returns with all the strength. ” Another problem, according to him, is that the taxation of dividends will take place over past profits and decisions of investments prior to the approval of the law.
Dividends
The teacher stated that there are 3 ways to tax dividends. They are:
- charges both individual and legal entity (biphasic);
- Snake of the individual;
- COLLECTION OF THE LEGAL ENTITY.
“For 70 years we have adopted this biphasic taxation. And it didn’t work out ”declared a fight. In 1990, Congress passed a law that concentrated the collection of taxation in the legal entity. According to the teacher, the measure resulted in increased federal revenue.
“There was no tax renunciation to the amounts that were paid to individuals, shareholders and shareholders“, These.
Special commission
The House Special Commission was created to analyze the bill (PDF – 190 KB), sent by the Lula government to increase from R $ 3,036 to R $ 5,000 the IRPF (Individual Income Tax) exemption range. The tax waiver will be funded with the largest.
The rapporteur of the bill in the House is the deputy (PP-AL). The commission will be attended by 3 experts and a representative of the economic team. Read the list:
- Marcos Barbosa PintoSecretary of Economic Reforms of the Ministry of Finance;
- Sergio wulf gulletsresearcher at IPEA (Institute of Applied Economic Research);
- Gustavo André Muller BrigagãoProfessor of Tax Law at FGV (Getulio Vargas Foundation);
- Guilherme Klein MartinsProfessor of Economics at the University of Leeds, UK.
The government proposal
The Lula Government’s proposal is to make an income tax reform that is neutral from the tax point of view, without impacts on public accounts. Suggests exempt those who earn up to R $ 5,000 per month and give a tax advantage to Brazilians who earn from R $ 5,000 to R $ 7,000, with the benefit that declines as the amount increases in this interval of values.
The intention of the government is to prevent the Brazilian who earns R $ 5,001 to have a lower net income than someone who receives $ 5,000.
Data from the Ministry of Finance indicates that 10 million Brazilians receive up to R $ 5,000 per month. Another 4 million earn from $ 5,000 to $ 7,000. In all, 14 million Brazilians will benefit, according to the government.
To fund the tax waiver with the 14 million people, the government wants to increase taxation for those who earn over $ 50,000 per month (or $ 600,000 per year). According to Pinto, it is not the creation of a new tax, but a new way to implement income tax.
Those who earn over $ 600,000 per year will be subject to a minimum tax. The person can deduct everything that is already paid for tax on income and will pay what to be left to fulfill the effective tax rate. The IRS will add all the income of the person and apply a rate that is progressive up to 10% for those who receive $ 1.2 million per year.
“This minimum tax will impact […] 140 thousand people ”these. “We are giving a benefit to 14 million people and financing this with a tax that will focus on 140,000 people”completed.
