Brazil’s new dividend withholding tax (WHT) has been in force for nearly a month, but questions remain about its application. The December 16, 2025 Q&A confirms that dividends paid to foreign governments, sovereign funds and social‑security‑benefit managers are exempt, and that the exemption also covers entities wholly owned by exempt investors. However, in structures where a Brazilian entity is held by a foreign holding company only partially owned by exempt investors, the exemption may not apply, potentially subjecting dividends to full WHT.
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KPMG · 18 days ago
Brazil has introduced a dual VAT model replacing PIS, COFINS, ICMS, and ISS with CBS and IBS. Nonresident sellers must register for CBS/IBS, issue electronic invoices, and comply with split payment rules from August 2026, with CBS fully operational at 8.8% from 2027 and full implementation by 2033.
EY · 19 days ago
Brazil has published the regulations for its new Tax on Goods and Services (IBS) and Contribution on Goods and Services (CBS), marking the operational start of the indirect tax reform. The regulations provide operational rules and a shared framework, requiring integrated compliance. Penalties may apply from August 2026, giving taxpayers a compressed adjustment period.
VatCalc · 21 days ago
Brazil introduced a new federal CBS tax on digital services effective 1 January 2026, replacing PIS and Cofins. The consolidated rate of 26.5% (CBS 8.8% + IBS 17.7%) applies to non‑resident providers and marketplaces, which must register and comply with Nota Fiscal e‑invoicing. B2B customers can self‑account, while B2C transactions are subject to collection by the provider.
Global VAT Compliance · 22 days ago
Brazil has enacted Decree No. 12,955, establishing a federal Contribution on Goods and Services (CBS) for digital services. The decree imposes destination‑based taxation on non‑resident suppliers, requiring registration and tax collection on B2C sales, while B2B transactions are subject to reverse charge. Platforms that facilitate services become deemed suppliers, responsible for collecting and remitting CBS.
International Tax Review · about 2 months ago
The article explains how Brazil’s new nationwide consumption tax, the IBS, replaces state and municipal taxes, marking a significant shift in governance and operational logic. It highlights the implications for municipalities and the broader tax system, underscoring the paradigm shift in Brazil’s indirect tax regime.
Fiscal Solutions · 3 months ago
Brazil's new IBS/CBS/IS tax system now treats advance payments as taxable events, requiring businesses to issue a Debit Invoice (NF-e type 06) and report tax in the payment period. The final invoice must reference the advance payments via <gPagAntecipado> to offset tax already paid and avoid double taxation. ERP systems must support advance-payment tracking and the new invoicing requirements.
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Key Takeaways
It states that dividends paid to foreign governments, sovereign funds and entities managing social security benefits are exempt from WHT under Art. 10, §5, II of Law No. 9,249.
Yes, the exemption also applies when dividends are paid to entities that are wholly owned, directly or indirectly, by exempt investors.
No, the exemption would not apply, and dividends to the foreign holding could be fully subject to WHT, as the exempt investor does not indirectly own 100% of the Brazilian entity.
The author suggests that the tax authorities clarify that the exemption should apply proportionally based on the exempt investor’s indirect ownership.
Primary source
Read the full article at LinkedInThis summary was published on VATfaqs.com on 27 January 2026. It relates to VAT developments in Brazil. The original source is LinkedIn.
