THE COST OF DIRECT TAXATION ON INVESTMENT IN BRAZIL

Authors

  • Nelson Leitão Paes Professor do Programa de Pós-Graduação em Economia (PIMES) da Universidade Federal de Pernambuco (UFPE)

Keywords:

effective rates, tax burden, comparative analysis

Abstract

This paper analyzed the impact of taxation on the investment in Brazil, focusing on the taxation of corporate income. Following the literature, it was used an economic model to calculate two indicators of effective tax rates - Effective Marginal Tax Rate (EMTR) and Effective Average Tax Rate (EATR). The EMTR measures the increase of the cost of capital due to corporate income tax. The EATR represents a measure of the average tax rate levied on an investment that has a pre-defined economic profit. The results suggest Brazil may face some difficulties to attract foreign investment. The country presents high rates for EATR and EMTR, higher than the average of the rich countries and well above the figures of development countries like Chile, Mexico, South Africa, Russia and China, potential competitors in attracting investments.

Downloads

Published

2018-12-05

Issue

Rev. Econ. Contemp., v. 21, n. 1, jan./abr. 2017

Section

Artigos

License

The Revista de Economia Contemporânea (Journal of Contemporary Economics) adopted the Creative Commons license attribution-type BY-NC until April/2015. The license attribution-type BY has been adopted ever since.

Ownership of copyrights belongs to the IE-UFRJ (Instituto de Economia da UFRJ), which will not pay copyrights for published works. In accordance with current copyright regulation and the type of copyright license adopted (CC-BY), article full or partial reproduction and release are allowed provided that the citation source is disclosed. In case this copyright rule is not obliged, a written warning will be issued by the publisher to the person who has disregarded this regulation.