Taxpayers subject to the Minimum Income Tax on dividends need to reorganize their finances to avoid unnecessary tax payments and penalties from the IRS for disguised profit distributions.
Since January, any dividends distributed above R$ 50,000 per month are subject to a 10% income tax withholding at the source. This regulation affects shareholders of companies of all types, including micro-enterprises under the Simples Nacional tax regime. The obligation to ensure this withholding occurs rests with the company and its accountant, emphasizing that it is crucial for businesses to be proactive in managing their tax responsibilities.
To minimize problems, experts recommend that individuals completely separate their personal expenses from corporate spending. Prior to 2025, such separation was less emphasized due to the absence of this tax; however, now it is necessary to ensure compliance and avoid fines. The withholding at the source does not imply a definitive tax burden; part of the withheld amount could potentially be refunded in 2027 after the personal income tax declaration is submitted.
This restructuring not only helps in managing tax liabilities but also assists in avoiding penalties related to disguised profit distributions that could attract scrutiny from Brazil's Federal Revenue Service. Taxpayers are thus advised to seek expert guidance to ensure that their financial practices adhere to current regulations and optimize their tax strategy accordingly.
