Brazil corporate profit remittances hit record before new tax

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Record $18 billion profit remittances in December, central bank data shows

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New 10% tax on profit remittances starts in January under Lula's administration

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Brazil's current account deficit stable at 3.02% of GDP, financed by direct investment

By Marcela Ayres

BRASILIA, Jan 26 (Reuters) -

Brazilian companies sent a record amount of profits abroad in December, central bank data showed on Monday, potentially anticipating ?a new tax on remittances that took effect this year.

Corporate profit and dividend remittances totalled $18 billion, more than double the $8.8 billion sent ?overseas a year earlier - the largest figure on record in the central bank's monthly series, which ?began in 1995.

Reflecting the surge, reinvested earnings in the country posted net ?outflows of $11.4 billion, meaning ?remittances exceeded profits earned in the month, another record.

From January, President Luiz Inacio Lula da Silva's administration began levying a 10% withholding ?tax on all profit remittances abroad.

The measure is part ?of a fiscal package to offset the expansion of income tax exemptions for workers earning up to 5,000 reais ($948.06) a month, another policy that took effect this ?month and is a key plank of leftist ?Lula's re-election agenda.

At ?a press conference, central bank statistics chief Fernando Rocha said the surge in dividend remittances was the main factor behind foreign direct investment posting a net outflow of $5.2 billion in ?December, versus a $1 billion inflow expected in a Reuters poll.

Rocha said the data could point either to tax anticipation by firms or to strong corporate profits in Latin America's largest economy last year.

For 2025 as a whole, FDI ended at 3.41% of gross domestic product, broadly in line with the 3.39% recorded in 2024.

STABLE CURRENT ACCOUNT

Brazil's current account deficit was also broadly unchanged from the ?previous year, ?reversing a deterioration seen earlier in 2025 and remaining largely financed by direct investment.

The country closed the year with a current account deficit of 3.02% of GDP, compared ?with 3.03% in 2024.

Earlier in the year, the deficit had widened to nearly 3.7% of GDP on a rolling 12-month basis, reflecting a narrower trade surplus as imports outpaced exports amid strong domestic demand.

Toward year-end, clearer signs of cooling emerged as the central bank maintained an aggressive stance, keeping interest rates at a nearly 20-year high of 15% to steer inflation back toward its 3% target.

Policymakers meet again on Tuesday and Wednesday, with markets ?widely expecting rates to be kept unchanged for a fifth straight meeting.

In December alone, the current account deficit came in at $3.4 billion, narrower than economists' expectations of a $5.3 billion shortfall, largely due to a strong $8.8 billion trade surplus, more than ?double the level seen a year earlier.

($1 = 5.2739 reais) (Reporting by Marcela Ayres; editing by Toby Chopra)