Dividend withholding tax collections remain far below government target
Revenue from Brazil’s export tax on crude oil appeared for the first time in the federal government’s May tax collection figures after the levy was introduced in March. The tax generated R$1.05 billion in federal revenue last month, according to data released on Thursday (25) by the Federal Revenue Service.
Claudemir Malaquias, head of the Revenue Service’s Center for Tax and Customs Studies, explained that the export tax is collected 60 days after crude oil shipments are loaded. As a result, the first payments began to be recorded only in mid-May. According to BTG economist Fábio Serrano, revenue from the tax is expected to reach about R$3 billion per month going forward.
The federal government temporarily reinstated the crude oil export tax at a 12% rate to offset diesel fuel subsidies.
According to tax authorities, higher oil prices also supported May’s revenue by boosting royalty collections. Own-source revenue from other federal agencies—a category that includes royalty transfers—totaled R$10.477 billion in the month, up 56.28% in real terms from May 2025.
Overall, federal tax revenue reached R$266.79 billion in May 2026, an inflation-adjusted increase of 10.69% compared with the same month a year earlier. In the first five months of the year, collections totaled R$1.32 trillion, up 6.42% in real terms.
Revenue administered directly by the Revenue Service rose 9.39% in real terms in May to R$256.31 billion. Adjusted for inflation, May’s total represented the highest amount ever recorded for the month since the series began in 1995.
The Federal Revenue Service also reported that withholding income tax on dividend payments has generated only R$1.5 billion in revenue so far this year.
For 2026, however, the government expects to raise about R$30 billion through its minimum tax on high-income individuals. Of that amount, R$23.76 billion is expected to come from the taxation of dividend distributions and R$6.18 billion from income earned abroad.
The measure was designed to offset the revenue loss resulting from expanding the personal income tax exemption threshold to monthly incomes of up to R$5,000 and granting a partial tax credit for taxpayers earning up to R$7,350 per month. According to government estimates, the personal income tax relief will reduce revenue by R$28 billion.
However, revenue from dividend taxation is not collected evenly throughout the year. Unlike the personal income tax relief, whose effects appear monthly through payroll withholding, receipts from dividend taxation depend on companies’ profit distribution schedules, which can cause fluctuations in revenue over the course of the year.
The final settlement of the minimum tax will take place only in the following year’s annual tax return. During the year, the minimum tax applies only to dividend distributions.
Meanwhile, according to the Federal Revenue Service, revenue from the Tax on Financial Transactions (IOF) was once again among the strongest contributors to federal tax collections.
IOF revenue rose 31.11% in May from the same month of 2025, totaling R$8.157 billion. The increase reflects the higher tax rates introduced by the Lula administration last year to boost revenue and support fiscal results in both 2025 and 2026.
In the year through May, IOF revenue has increased 38.77% from the same period last year, reaching R$41.82 billion.
*By Giordanna Neves — Brasília
Source: Valor international
https://valorinternational.globo.com/