CNPJ and Inscrição Estadual are two types of registrations for companies established in Brazil. While their functions might be similar, they have some differences, as shown in this article.
Companies seeking to establish themselves in Brazil need to obtain registrations from different entities in order to start its activities. Two registrations required are Cadastro Nacional da Pessoa Jurídica (CNPJ or National Registry of Companies) and Inscrição Estadual (IE or State Registration).
CNPJ and IE are often confused due to their resemblance and, mainly, because they can now be obtained in the same process due to agreements between the Federal Revenue, Boards of Trade and State Treasury Secretariats. But there are many differences between them, especially in regards to their function, who needs to register, and which documents are necessary.
Who Needs To Own It
The CNPJ is mandatory for any company established in Brazil prior to initializing operations in the country. The company must obtain one CNPJ number for each facility or branch, no matter if it is in Brazil or abroad. Foreign companies must also own a number in order to own equities in Brazilian companies.
Some entities that are not exactly defined as companies also need a CNPJ number. These include government agencies, condominiums, and candidates for political positions.
Just like CNPJ, the Inscrição Estadual is also obligatory for companies established in Brazil in order to begin commercial activities. However, the main difference is that not every company needs to obtain an IE number: Only those that collect ICMS — State Tax on the Circulation of Goods and Services — are required to do so.
This means that companies from the trade, industry, and interstate or intermunicipal transport sectors need to own an Inscrição Estadual. If a company does not operate in any of those sectors but, for some reason, needs to pay ICMS, then IE is mandatory.
CNPJ is a registration at the Federal Revenue’s database. Information regarding tax accountability is stored in this database and anyone can obtain certain data about companies by accessing the Federal Revenue system with a CNPJ number. The CNPJ administration has a responsibility of Federal Revenue Secretariat.
It is possible, though, to apply for a CNPJ number at most State Boards of Trade, due to agreements between them and the Federal Revenue.
Since Inscrição Estadual is related to ICMS, a state tax, the entities responsible for it are the Treasury Secretariats — Secretaria da Fazenda — of each state. However, secretariats operate along with the Federal Revenue to issue this registration number. Basically, the process is conducted in the same software, known as PGD, which is short for Programa Gerador de Documentos.
Both processes are conducted by the PGD software, but in order to generate a form, some documents must be presented.
To obtain a CNPJ number, the following are needed:
- Ficha Cadastral da Pessoa Jurídica, or FCPJ, a form that can be filled electronically
- Quadro de Sócios e Administradores, or QSA, which is the list of partners and managers of the company
- Documento Básico de Entrada, or DBE, which is the basic application document, provided by the Federal Revenue
In order to obtain an IE, the notarized copy of the following documents are needed:
- IPTU cover of the real estate where the company’s headquarters are located
- Rental agreement, if the place is rented
- In some states, an authorization or license granted by the State Environmental Company, like Cetesb
- Articles of association
- Personal documents (CPF and passport, for example) of the company’s owner or partner
- Power of attorney and attorney’s personal documents, if needed
- Company’s owner, partner, or attorney proof of residence
Characteristics Of The Registration
The CNPJ number is composed by 14 digits:
- The first 8 digits are the registration number
- The following 4 digits identify the company branch, it will be different for each store or branch, for example
- The last 2 digits have the function of a check-sum of the previous 12 digits
Differently from CNPJ, the Inscrição Estadual number is composed by 12 digits:
- The 9th and the 12th digits are both check digits
- IE of farmers follow a different model: they start with a letter “P” and have 13 digits, where the 10th digits is a check digit