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IRPJ stands for Imposto de Renda sobre Pessoa Jurídica (Corporate Income Tax). Like CSLL that is outlined in another article IRPJ is a corporate revenue tax that applies to the net profits of any legal entity in Brazil. IRPJ is a federal tax paid by public or private legal entities residing in Brazil, regardless on their purposes or nationality.
As the Brazilian tax legislation changes quite often, it is sensible for companies they employ an experienced accountant so as to avoid any problems with the revenue.
IRPJ is declared through a type approval modality. At the beginning of every year, taxpayers must prepare an annual adjustment declaration, related to the previous year's earnings. Then the values will pass through the Federal Revenue evaluation. The Federal Revenue will assess and subsequently approve or reject the submission. This process is web based and runs online.
In Brazil, the IRPJ taxation is progressive, meaning that the more a company earns, the more the company will pay. This way, the tax's aliquots are directly proportional to the taxpayer's income and will be calculated on this basis.
The tax calculation basis is 15% on the companies' earnings, plus a surtax of 10% (on annual income over BRL 240,000.00).
In order to organize it, the Federal Revenue releases annual progressive scales, determining the percentages to be calculated over the companies' income.
An additional determining factor as to how much companies will pay in IRPJ is the sector that they are engaged in. The aliquots can be different for each area.
According to its legal form and profitability, companies will pay IRPJ following those taxation arrangements, foreseen in the Brazilian tax legislation:
Corporate Tax deductions include:
This is an optional taxation regime that allows the unified collection of municipal, state and federal taxes. In addition to unifying all taxes, the rates are lower compared to the payment of all of them separately and progressively. It is always calculated based on the monthly gross revenue of the company.
This taxation regime benefits companies that are considered to be micro or small size. The definitions that are used in Brazil to categorize these types of companies are:
In addition to having lower rates for several taxes, Simples Nacional will also benefit from:
Not all companies qualify for the benefits of Simples Nacional. Some examples of company profiles that cannot opt for Simples Nacional, even if they comply with all definitions stated above are those that:
The taxes that are unified by Simples Nacional are:
Taxes other than those listed above, are not part of Simples Nacional and must be calculated and paid separately.