Bill 1087/25 has been sent to the President; it will take effect from January 2026 once published in the Official Gazette.
Brazil’s Senate passed Bill 1087/25 on 5 November 2025, which includes various tax measures for companies regarding corporate minimum tax and withholding tax.
The tax measures are as follows:
Reduction rules for minimum tax
Bill 1087/25 states that if the combined effective corporate tax on the paying company and the minimum tax on dividends exceeds the prescribed nominal rates, a reduction will apply. Specifically, the effective rate will be reduced to:
- 34% for standard corporate entities
- 40% for financial institutions
- 45% for insurance companies
Withholding tax on dividends paid abroad
A 10% withholding tax will also be applied to dividends or profit distributions paid to foreign recipients, whether individuals or legal entities. Exemptions include:
- Dividends/profit distributions related to results up to 2025, if approved by 31 December 2025;
- Payments to foreign governments with reciprocal tax treatment for Brazil;
- Payments to sovereign wealth funds;
- Dividends/profit distribution to foreign entities managing social security or pension benefits.
If the combined effective corporate tax on the paying company and the 10% withholding exceeds the nominal rates, the excess can be claimed as a credit within 360 days of the payment date.
Withholding tax on high-value dividends for individuals
A 10% withholding tax will be applied to dividends or profit distributions paid by the same company to the same individual when monthly payments exceed BRL 50,000. However, dividends or profit distributions related to results up to the 2025 calendar year will be exempt from this withholding tax if approved by 31 December 2025.
Minimum tax on high individual incomes
A minimum tax will apply to individuals earning over BRL 600,000: 10% for income equal to or above BRL 1.2 million, and a progressive rate of 0–10% for income between BRL 600,000 and BRL 1.2 million.
Bill 1087/25 has been sent to the President for signature. Once enacted and published in the Official Gazette, the new rules will generally take effect from January 2026.
