Corporate Income Tax
Not only people have to declare their incomes over the year; companies also do. In this article we will give you more information about the Legal Person Income Tax.
The Brazilian Federal Constitution of 1988 grants the federal, state and local governments the right to levy taxes in order to guarantee the maintenance of the services for the population. A big number of different taxes can be charged by the authorities over both natural or legal person.
The IRPF (Imposto de Renda sobre Pessoa Física or Natural Person Income Tax) is charged over the profit of natural people, whether it comes from national or international sources. Taxes vary from 15% to 27,5%, depending on the income.
The IRPJ (Imposto de Renda sobre Pessoa Jurídica or Legal Person Income Tax) is the one charged over the profit and capital gains of a company, whether they are produced by operations in Brazil and abroad. It's calculated over the net income of operations made by the company.
Who must declare the IRPJ?
All legal people - and natural people who are considered to be equal to them - who live in Brazil are contributors are also responsible for the tax collection. Brazilian corporate income tax is charged at a 15% rate over the profit, with a 10% surtax applicable to profits that exceed BRL 20.000,00 per month (or BRL 240.000,00 per year).
The tax collection can be verified monthly or every three months, with deadlines on March, 31st, June, 30th, September, 30th and December, 31st. If the verification occurs monthly, the tax must be paid until the last day of the following month of the verification; if it happens every three months, the payment must occur until the last workday of the following month of the verification.
The aliquot of the additional is unique for all the legal people, including financial institutions, insurance companies and similar.
What about branches in other places?
It's optional for legal people who have local branch offices to do non-centralized bookkeeping. The company should only include in the headquarters' accounting the results of each branch, by the end of every month. This also applies to the companies that have branch offices in Brazil and headquarters abroad.
How can I declare the IRPJ?
To declare the income tax, it's necessary to fill a form that is only available is Portuguese. This document can be requested at any Banco do Brasil or Caixa Econômica Federal branches or online, on the website of the Receita Federal, where it's possible to download the PGD (Programa Gerador de Declaração, which is the program where the document will be available), in which the form will be filled up and then sent to the Receita Federal.
The end of the IRPJ
Every year, the World Bank does a report known as 'Doing Business' to find out where it is easier to open and maintain a company. In the last edition of 'Doing Business', Brazil ranked the130th position in a list of 185 countries,
Considering this, Receita Federal plans to finish the declaration of IRPJ until 2014. Along with other seven documents, the main accounting documentation will be abolished as an attempt of Receita Federal to reduce the bureaucracy, the time and the costs to open a company in Brazil.
IRPJ and the other documents won't be requested anymore because they sometimes provide information that are already known by other means, especially using the internet, with the Nota Fiscal Eletrônica and the SPED (Sistema Público de Escrituração Digital or Public Digital Bookkeeping System). Also, the government is trying to reduce the tax burden to the companies, which was estimated in 1,5% all the companies' annual revenue.