Understand how income tax for companies works

Like individuals, companies are also required to account for Lion about the evolution of their assets. What changes is the system system, because the Legal Entities Income Tax (IRPJ) It has characteristics that make it more complex than the IRPF, and which mainly involve the form of calculation of the tax and the fulfillment of ancillary obligations.

Another peculiarity of IR for companies is that there is no single progressive table, as with the individual taxpayer. This is because different factors can influence the amount of tax payable, such as revenues, sector of activity and even the fact that the company has organized or not.

In this guide, Infomoney has gathered the main aspects to understand how IRPJ – incidence, forms and periods of calculation, necessary care and other specialist tips work. Keep reading and learn more!

What is the Legal Entities Income Tax (IRPJ)?

The IRPJ is a federal tribute that focuses on the equity increase of companies.

Usually, it is often said that this tribute focuses on the company’s profit. But the correct thing is to consider as a generating fact the equity increase, as the law allows to compensate for the loss of one year in the following year. As Rafael Bifano, tax lawyer at PLKC lawyers notes, not always profit and equity increase represent the same.

“Suppose that, in a given year, the company had a loss of $ 30,000 and, the following year, profited $ 150 thousand. In this case, we have a property increase of $ 120 thousand – and it is about this amount that will focus on IRPJ – because $ 30,000 was the recovery of the loss. This tax does not focus on heritage, only about its growth,” he explains.

The law determines a limit for the compensation of losses in the IR of companies. Later, we will detail this theme.

IRPJ Taxation Regimes

There are three tax regimes for the purposes of calculating the IRPJ: Real Profit, Presumed Profit, Arbitrated Profit and National Simples.

Here’s how each one works.

Real profit

In real profit, the IRPJ is calculated based on the result that the company actually increased in the year, after adjustments (additions and/or expense exclusions).

In this tax regime, only the expenses directly related to the company’s activity can be excluded from the calculation basis, such as Rafael Bifano alerts.

“For example, a tax fine is not deductible from the IRPJ. To reach the amount of the tax, the company must add to profit all extraoperational expenses, that is, those that are not mandatory for its operation,” says the expert.

The basic rate of real profit is 15%. But if the company has annual revenues over R $ 240 thousand, it suffers an increase of 10%.

As this regime uses profit as a basis of calculation, the IRPJ will only focus when the company has a positive result. In this case, if the company has had damage in previous years, the calculation basis of real profit may be reduced by up to 30% of the profit from the exercise to be taxed.

Companies that can opt for real profit

Any company can opt for the real profit regime. But it is important to know that your system is more complex than the following regimes, as it involves certain ancillary obligations, such as the presentation of financial and accounting records to the IRS.

And there are companies that are required to this tax system, according to. Some examples are:

• Banks, insurers and open private pension entities;
• Companies with annual revenues over R $ 78 million;
• Public companies;
• Companies that receive income or capital gains from abroad.

Presumed profit

In presumed profit, the tax base is the company’s revenue, on which the tax authorities apply a particular percentage.

In this system, the IRPJ rate is always 15%. What changes is the percentage of presumption of profit on revenue, which goes from 1.6% to 32%, depending on the activity of the company.

As it is the tax authorities who determines the value of IRPJ based on the activity sector, the company is not required to have such a rigid record of all its expenses. This makes the presumed profit simpler than real profit.

Companies that can opt for presumed profit

To use this tax regime, the company’s annual revenues may not exceed R $ 78 million, and it must be out of the real profit obligation list.

And, depending on the margin of the business, the presumed profit can be the best option, as Rafael Bifano points out.

“For example, if the company’s average profit margin is 20% and the tax authorities uses 8% as a presumption of profit for its sector, it is worth choosing presumed profit,” says the expert.

Another peculiarity of presumed profit is the possibility of taxation by the cash regime. In this case, the tax authorities considers as revenue the money the company has already received for its sales.

“Imagine that a company has made a big sale and will take a long time to receive. If it taxes for the cash regime, you will not have to pay the tax before receiving the sale, which can give your breath,” explains Rafael Bifano.

Arbitrated profit

The logic of arbitrated profit is the same as the presumed profit – IRPJ is calculated based on a percentage of sales. The difference is that the percentages applied is 20% higher, as this system is contingent and determined by the tax authorities.

“When the company does not have regular bookkeeping, or had a problem in its integrated system, or its financial records were lost or stolen, for example, the IRS can arbitrate profit,” says Rafael.

The option for arbitrated profit is usually temporary, as its rates are higher. Once the company regularizes its pending issues, it returns to its original tax regime.

Simple national

Simples Nacional is the tax regime aimed at micro and small businesses – including the. It was created with the objective of simplifying and reducing the tax burden of small businesses

In addition to the IRPJ, this system covers seven other taxes (federal, state and municipal), bringing together the payment of all of them in one guide. Simple tax rates are in five attachments (or tables) and vary according to the company’s revenue and activity sector.

Also read:

Companies that can opt for Simples Nacional

In order to tax by simply, the company’s annual revenues must be up to R $ 4.8 million. If the partners have participation in other companies, this limit also applies to the sum of all of them.

Other requirements for adhesion to simple are:

• Cannot have a legal entity in the corporate framework of the company;
• It cannot be S/A;
• Partners must live in Brazil;
• Obligations with the tax authorities must be up to date;
• The company’s activity should be included in one of Simples Nacional’s annexes.

IRPJ calculation periods

Depending on the tax regime and the company’s fiscal planning, the IRPJ determines may be annual, quarterly or monthly.

The annual IRPJ payment is only allowed for companies that tax for real profit. Even so, they are required to anticipate the tax monthly, which is calculated based on monthly billing. At the end of the year, when investigating the profit, the company calculates the IRPJ due. If even after the monthly anticipations there is still balance to pay, you must collect the difference from the IRPJ. And if the sum of the paid months is higher than the tax due, it will be entitled to restitution.

But if the company can demonstrate, through monthly balance sheets, that it has paid enough IRPJ (or more) in advance, you don’t have to wait until the end of the year to compensate for these values. With the suspension balancethe compensation of the tax can be quarterly.

The quarterly investigation is mandatory for the presumed and arbitrated and optional profit companies in the real profit system. The quarters close on March 31, June 30, September 30 and December 31, and the tax payment must be made by the last business day of the month following the closing of each quarter.

Finally, the system of Simples Nacional requires the monthly calculation of the IRPJ, and the payment of the tax must be made in the month following its calculation, through the DAS (Simples Nacional Collection Document).

Is there IRPJ refund?

Yes. Just as the individual taxpayer, companies are also entitled to repay the tax they have paid more.

This can happen for different reasons: compensation for damage from previous exercises, deduction of tax incentives, rectification of the declaration, among others. But unlike individuals, the company needs to request refund, as the tax authorities does not automatically return the values, as Rafael Bifano warns.

“The company can request the refund of the IRPJ in cash or compensation. Usually, reimbursement usually takes longer.”

How to make the company’s income tax return?

To make the IRPJ statement, you need to access the IRS website and download the updated declaration generator program (PGD). However, with the exception of MEI, all other corporate types are required to have an accountant, who will be responsible for filling in and sending the income tax of the legal entity.

“By law, companies need to have an accountant to sign their balance sheets. In addition, there are several ancillary obligations to be fulfilled (especially in real profit), and all this is very complex to be done without a specialist,” says Rafael Bifano.

According to the taxpayer, nothing replaces a good accounting company, not even the most advanced software.

“In Brazil, it is risky to depend on ready and packaged software for tax management. We have discussions about IRPJ that extend for decades, there are many peculiarities that need human intervention. And good accounting companies have experience with IRS and have already invested in IT,” warns the expert.