Brazil’s government will propose measures slashing the corporate income tax rate while introducing taxation of dividends, Economy Minister Paulo Guedes said in an interview. Guedes gave the interview to the Estado news group while attending the World Economic Forum in Davos, Switzerland. He said, “Everybody else in the world is cutting (corporate) taxes; if Brazil does not follow suit, investment money will go elsewhere.” The current corporate income tax rate in Brazil averages 34%. According to a study by the Organization for Economic Cooperation and Development (OECD), Brazil has the highest corporate income tax rate in the world. The U.S., by contrast, has an average corporate income tax rate of 25.8%, according to the study. Guedes said that, to compensate for lost income, the government will propose introduction of a 20% tax rate on dividends. He said the combined measures will tend to foster investment because international investors will be attracted by the 15% income tax rate while introduction of the levy over dividends will stimulate re-investment of profits rather than their distribution to shareholders.
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