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Income Tax Correction Provides Immediate Breathing Space for Taxpayers, but Compensation via Dividend Taxation and Minimum Tax Could Change Economic Scenario in 2025.
The Chamber of Deputies unanimously approved the correction of the Income Tax table, a measure long awaited by the population. The last update occurred during Dilma’s presidency, in 2015 or 2016.
The adjustment represents a direct relief for taxpayers but raises concerns about compensating for the fiscal waiver by the government.
The chosen path mainly involves the taxation of dividends, a decision that promises controversies and unexpected effects on the market and the economy.
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The Correction of the Table and the Weight of Indebtedness
The approval of the correction was positively received, as it theoretically reduces the direct tax burden on citizens.
Deputies highlighted that this change could increase disposable income, fostering consumption and boosting the economy.
However, according to youtuber Beatriz Aguilar from the channel Papo de Bolsa, a more cautious analysis shows that the reality of Brazilians is far from this scenario.
A large part of the population lives in “survival mode“, with record levels of indebtedness and default.
The extra amount in hand, which can vary between R$ 300 and R$ 500 monthly, is unlikely to translate into consumption.
The trend is that this money will be directed to pay debts, such as credit card debt, overdraft, or loans.
The difficulty in balancing the monthly budget—committed to rent, food, education, and health—limits the positive effects of the tax relief on commerce.
Debate on Annual Correction
During discussions, some parties defended that the table should be corrected annually. However, the President of the Chamber, Arthur Lira, blocked the idea by stating that the measure would lead to continuous fiscal waiver, worsening the imbalance of public accounts.
According to Minister Simone Tebet, there is a risk of default in 2027 if revenue does not keep pace with spending.
The proposed solution was to give the government one year to present a model for annual correction.
One of the ideas is to link adjustments to mechanisms such as the fiscal framework, ensuring accountability in its application.
Still, doubts linger about effectiveness, as historically, governments resort to exceptions to exceed fiscal limits.
The Compensation: Dividend Taxation
The government bets on the taxation of dividends as the main way to compensate for the fiscal waiver.
The proposal establishes a 10% withholding tax for those receiving more than R$ 50 thousand monthly from the same legal entity.
The measure affects both publicly traded companies and private businesses.
This point represents a turning point in Brazilian tax policy. Dividends had not been taxed for decades, unlike in many countries.
The problem, however, is that in Brazil, the tax burden on companies is already among the highest in the world. The sum of corporate taxes and the new taxation tends to pressure companies and investors.
Possible Reactions from Companies
Experts point out that companies may seek alternatives to reduce the effects of taxation.
One of them is to increase the frequency of dividend distribution, diluting monthly amounts to avoid the R$ 50 thousand limit.
Another solution may be to adopt stock buybacks, a common practice in the United States, which increases stock value without generating immediate tax for shareholders.
Private companies, in turn, may resort to incorporating partners’ expenses into corporate accounts, reducing the profit margin distributed as dividends.
Reimbursements and integrations of personal expenses may gain traction as a tax planning strategy.
Taxation on Dividends Sent Abroad
The project also includes a 10% tax on dividends sent abroad, above R$ 50 thousand.
This rule mainly targets executives and partners who receive profits from subsidiaries outside the country, usually in remittances made at the end of the year.
The measure broadens the scope of collection but may generate evasion strategies similar to those expected in the domestic market.
Minimum Tax for High Income
Another aspect of the project is the creation of a minimum tax for individuals earning more than R$ 600 thousand a year.
The rate is progressive, reaching 10% for those earning above R$ 1.2 million.
The calculation will be made on the annual declaration, including currently exempt assets, such as dividends.
However, investments in LCI, LCA, and real estate funds are excluded, sectors considered strategic for the economy, especially for the real estate market and agribusiness.
Limits of Expected Collection
Despite the measures, there is skepticism about the government’s capacity to achieve the desired revenue.
The recent example of the “tax on t-shirts” serves as a warning: the revenue forecast fell short of expectations, while the side effects impacted consumption and even the Postal Service, which attributed losses to import policies.
In the case of dividends, there are fears that companies will find ways to circumvent taxation, reducing the effectiveness of the compensation.
The consequence may be the need to create new taxes in the future, maintaining pressure on society.
Expectations and Next Steps
The project still needs to pass through the Senate and may undergo changes, as well as potential presidential vetoes. The discussion does not end with the approval in the Chamber.
The debate on fiscal responsibility, annual table correction, and collection methods will remain at the center of the economic agenda.
Meanwhile, the average citizen awaits the practical effects on their pockets.
The direct tax relief is undeniable, but its impact may be limited by the financial reality of most Brazilians. Meanwhile, the business sector prepares to adapt strategies in light of the new taxation.
The correction of the Income Tax table was an important advance, but the method of compensation chosen by the government generates uncertainties.
The taxation of dividends may face practical resistance, with companies and investors adjusting behaviors to mitigate impacts.
It remains to be seen how the process will proceed in the Senate and whether the model for annual correction will be implemented without further compromising public accounts.
The challenge is set: to balance relief for the population, fiscal responsibility, and sufficient revenue to maintain the functioning of the State.
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