An empirical analysis of the Allowance for Corporate Equity (ACE) system in Brazil by José Roberto Afonso and Melina Rocha Lukic (2016).
Final Remarks
• All the justifications presented by the Ministry of Finance does not take into account: • 1) the difference in the legal system of the company that pays and the company receiving JCP, • 2) the system of dual taxation scheme of this income in Brazil and • 3) the fact that the JCP has never considered tax benefit by the tax authorities.
• JCP regime is not separated from the rest of the rules governing the taxation of corporate income • Any attempt to abolish or even change the regime must consider the conditions that justified its design, and must implement integrated alterations. • It is a great mistake to treat this as a tax measure isolated from the rest of the tax, fiscal and economic context.
