KLA’s Tax Law partners Victor Polizelli and Juliana Nunes have published on the Orbitax portal the article “Brazil: Implications of the Newly Introduced Brazilian 10% WHT on Outbound Dividends.”
In the article, the authors analyze the legislative proposal that introduces a 10% withholding tax on dividends paid abroad as of 2026, examining its legal foundations, stated objectives, and potential impacts for foreign investors.
The analysis also addresses structural controversies of the model, including its interaction with international double taxation treaties, risks of non-recoverable double taxation, and possible discussions involving discriminatory treatment between resident and nonresident shareholders.
The partners note that, although the new WHT has been presented as a measure of tax fairness, its application may result in retroactive economic effects, particularly because it reaches dividends distributed as of 2026 even when derived from profits recorded in prior fiscal years.
The article also highlights the importance of the “grandfathering” regime set forth in the Bill, stressing that companies with accumulated profits through 2025 will need to adopt timely corporate measures to ensure the new tax does not apply to historical results.
Read the full article on Orbitax’s website.
