Individual and Corporate Income Tax
In Portuguese Individual and Corporate Income Tax is named Imposto sobre a Renda e Proventos de Qualquer Natureza and often referred to by the abbreviation IR.
The Individual and Corporate Income Tax is the amount you pay according to the amount of profit earned. When applied to people, it's called IRPF or Imposto de Renda da Pessoa Física, the individual income tax; when it applies to companies, is called IRPJ or Imposto de Renda da Pessoa Jurídica, the corporate income tax.
It has to be paid monthly and declared annually. There are five rates for the individual income tax:
- less than BRL 1499,16: 0%
- from BRL 1499.16 to BRL 2246.75: 7,5%
- from BRL 2246,76 to BRL 2295,70: 15%
- from BRL 2295.71 to BRL 3743.19: 22,5%
- greater than BRL 3743,19: 27,5%.
This means that people who earn BRL 5000 and people who earn BRL 20000 pay the same amount of tax – which is one of the complaints about the IR. This is perhaps one the biggest criticisms made about the tax: the fact that people who earn a really large amount of money don't pay taxes that are proportional to their earnings.
Companies have only one rate, of 15%, and all firms and societies, registered or not, have to pay IRPJ. The basis of calculation is the real profit generated in the tax period. There are four taxation periods during the year, which end of the following dates: March, 31st; June, 30th; September, 30th and December, 31st. If the contributor prefers, the real profit can be taxed annually.