Brazil Considers Minimum Tax to Fund Income Tax Exemption for Lower Earners

Brazil is considering implementing a minimum tax of up to 10% to fund an income tax exemption for those earning up to R$5,000 starting in 2026. This proposal was discussed in the special commission on changes to the Income Tax (PL 1087/25). The government aims to address income inequality by ensuring the tax system is more progressive. The proposed changes also include taxing profits and dividends of company partners, particularly those exceeding R$600,000 per year. While some experts worry about the potential impact on investments, others argue that taxing dividends is a common practice globally and could help reduce inequality. The debate continues as the government works to finalize the details and address concerns raised by various stakeholders.