Brazil’s Dividend Tax Hits Foreign Investors

For nearly 30 years, foreign shareholders of Brazilian companies received dividends entirely tax-free. That changed earlier this year, when Brazil reintroduced a flat 10% tax on dividends paid to non-residents. Nine months later, we have a clearer picture of how much the new tax is generating for the government.

Dividends have long been one of the easiest ways for foreign investors to move money out of Brazil. Once a Brazilian company paid taxes on its profits, it could generally distribute those profits to shareholders abroad without an additional layer of domestic taxation. Now, however, the 10% withholding tax makes that process significantly more expensive.

According to a recent report from Brazil’s federal tax authority (Receita Federal), the government collected nearly BRL$5.3 billion in taxes on profits and dividends between January and September 2026. Of that amount, approximately BRL$1.9 billion came from non-residents. That translates to roughly US$350 million from foreign shareholders alone.

Despite these figures, the government has repeatedly lowered its annual revenue expectations. Brazil initially projected about BRL$29 billion in dividend tax revenue for 2026, but later reduced that estimate to BRL$17.2 billion and, more recently, to BRL$10.5 billion. Even so, the new tax continues to generate substantial revenue.

The newly published numbers show just how much the tax policy is changing the cost of doing business in Brazil. While the government may be collecting less than it originally expected, foreign shareholders are already feeling the financial impact.