Billionaires’ Tax-Free Dividends Are Targeted for Brazil Coffers

Itaú Unibanco Holding SA, one of Latin America’s largest banks, paid an annual dividend in March that handed 1.1 billion reais ($186.8 million) to Brazil’s billionaire Moreira Salles clan. How much tax will the descendants of Unibanco’s founder pay on their windfall? Zero.

For almost 30 years, Brazil has been one of the few governments that doesn’t tax the dividends of companies based in the country. But as leftist President Luiz Inácio Lula da Silva deals with spiking inflation and a slump in popularity, he’s looking to dip into that potential revenue bonanza.

The government is proposing a 10% tax ...