The Tax Waiver Impact on Profits and Dividends as an Economic Efficiency Instrument

The tax waiver, which is an increasing discussion in Brazil, motivated this study, that objectified investigate what is the tax waiver impact on profits and dividends as an economic efficiency instrument. It also searches to identify if there is a statistic correlation that can explain the maintenance of this public expenditure. The quantitative approach research, used two independent scenarios. In the first one, it was verified in relation to the period of 2007 to 2016, the tax expenditures and tax waiver correlation, with economic growth, GDP and investments indicators. In the second one, it was verified through a multiple regression, the correlation between tax waiver and profits and dividends, with economic growth, GDP and investments indicators. It was shown that in regime of exception, as it is in the current recessive economic period, the tax waiver on profits and dividends economic efficiency find itself compromised. Affected by the constant inflation raises, it was verified that the waived values are not explained by the variable that, in 1995, justified their institution – the investments. As of those results was possible to identify that the budget balance pass through a tax policy similar to the successful examples observed in OECD country members, that is capable of balance the taxation profit, corporate production and that contribute to companies' cash flow production capacity and more investments. This study aims to not only contribute to draw tax restructuring plans, but also to instigate the proposes in Brazilian tax legislation changes debates that finds horizons to clear the Sistema Tributário Nacional, that in time, through an effective and efficient taxation, contribute to a tax justice and budget balance. Future researches can evaluate these results in a context with a more representative sample of these data and obtain more statistic sensibility.