Today, we will address a crucial topic for any company in Brazil: the tax regimes. Essentially, there are three distinct tax regimes that can significantly impact a company’s financial results: Simples Nacional, Lucro Presumido (Presumed Profit), and Lucro Real (Actual Profit). Choosing the best option can optimize your tax burden. Each regime has its own pros and cons, as well as specific rules for adoption.
1. Simples Nacional (National Simple):
This is the simplest tax regime, aimed at micro and small businesses. To be eligible, the company must have an annual gross revenue of up to BRL 4.8 million. Additionally, there are other restrictions, such as companies with foreign shareholders not being allowed to adopt this regime.
The main advantage of Simples Nacional is the consolidation of various taxes into a single payment, made through the National Simple Collection Document (DASN). Instead of paying taxes like IRPJ, CSLL, PIS, COFINS, IPI, ICMS, ISS, etc., separately, you pay a single amount that covers all of them. In theory, this regime offers a lower tax burden, depending on the type of business and its structure. The rates can vary between 4% and 33%, calculated directly on revenue.
2. Lucro Presumido (Presumed Profit):
Under this regime, the company’s profit is estimated based on its business activity. The Federal Revenue Service has established profitability rates for each type of business. For example, for service companies, the presumed profit is 32% of gross revenue, while for commercial businesses, it is 8%. Income tax is paid on this pre-established profitability margin, regardless of the company’s actual profit.
For example, a service company with a gross revenue of BRL 1,000.00 will pay income tax on BRL 320.00 (32% of BRL 1,000.00). Additionally, PIS and COFINS are taxed at a rate of 3.65%, with no possibility of generating credits. Companies with annual revenues exceeding BRL 78 million cannot opt for this regime. It is important to note that the rules for ICMS and ISS remain the same as in Lucro Real.
3. Lucro Real (Actual Profit):
Lucro Real is the most complex regime, where the company pays income tax based on its actual profit. If the company makes a profit, it pays tax on that amount; if it incurs a loss, no income tax is due. The tax rules are stricter, requiring all of the company’s costs and expenses to pass the deductibility test. This regime is typically adopted by large companies or those with more complex operations. As with Lucro Presumido, the rules for ICMS and ISS remain unchanged.
Which Regime is Best for Your Company?
There is no simple answer to this question. It is necessary to analyze the restrictions of each regime and consider several factors, such as the company’s activity, payroll amount, profitability level, revenue amount, expense volume, company costs, customers, and suppliers, among others.
With this information, a tax study and simulations can be performed to reach a well-informed suggestion. Remember that the percentages presented are for illustrative purposes only.
Important Note: A company can only change its tax regime at the beginning of the year, and the chosen regime must be maintained until the end of the fiscal year. Switching regimes during the year is not allowed.
We hope this post has helped you better understand the tax regimes in Brazil. If you have any questions or need support, please contact us!