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Is my IT company better off in the Presumed Profit regime, National Simple regime, or Actual Profit regime? Which of these tax models will allow me to pay the least amount of taxes? In Brazil, most businesses opt for the Simples Nacional regime, but once annual revenue exceeds R$ 4,800,000.00, companies must transition to the Presumed Profit regime.
To determine the best tax regime for your IT company, it’s highly recommended to consult a specialized accounting firm for IT companies in São Paulo. In this article, we will explore the key differences between these tax regimes and help you decide which is best for your business.
Actual Profit (Lucro Real)
In the Actual Profit regime, income tax and social contribution are calculated based on the net profit at the end of the accounting period. The tax rate is 15% on the gross real profit, or profit before taxes.
This regime is considered the general tax regime, as it can be adopted by any company. However, it is also the most complex. Taxes need to be paid on a monthly basis according to the percentages defined by the company’s business activities.
At the end of the year, actual profit is calculated, and from that, the final tax liability is determined, with any monthly payments made throughout the year deducted from the total.
One advantage of opting for the Actual Profit regime is that companies can sometimes end the year with a tax credit, which occurs when the total taxes paid in advance exceed the final tax amount calculated at the end of the year.
There is also the option of quarterly actual profit, where taxes are calculated and paid at the end of each quarter. The four quarterly calculations are considered final, not anticipations.
Presumed Profit (Lucro Presumido)
In the Presumed Profit regime, Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL) are calculated based on a predicted gross revenue. This profit margin is pre-established by law and based on percentages defined for each business sector.
In this regime, PIS and COFINS are calculated cumulatively, with a rate of 3.65% on gross revenue.
One key point to note is that, since taxes are calculated based on presumed profit, if the actual profit at the end of the accounting year is lower than what was determined, taxes will still be calculated based on the presumed value.
Companies under the Presumed Profit regime can have up to R$ 78 million in annual gross revenue.
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National Simple (Simples Nacional)
Created in 2006, the Simples Nacional regime was designed to simplify tax payments for businesses, especially for Microenterprises (ME), Small Businesses (EPP), and Individual Microentrepreneurs (MEI).
All taxes are consolidated into a single payment guide (DAS), and taxation is determined according to the business activity, with rates ranging from 4.5% to 16.93%. This is considered the least bureaucratic and most cost-effective option. However, not all companies can opt for this regime.
The maximum annual gross revenue allowed for businesses in this regime is R$ 4.8 million. For Individual Microentrepreneurs, the maximum annual gross revenue is different, capped at R$ 81,000.
Choosing the Right Regime for Your IT Company
Deciding on the best tax regime for your IT company depends on several factors, including your business’s revenue, expenses, and long-term growth plans. While Simples Nacional might be the easiest option for smaller businesses, those exceeding the revenue threshold must consider whether Presumed Profit or Actual Profit is a better fit.
To make an informed decision, consulting with a specialized accounting firm is crucial. Experts in IT business accounting can analyze your company’s specific situation and guide you toward the most tax-efficient solution.
How CLM Controller Can Help
If you’re looking for professional assistance in choosing the best tax regime for your IT company, CLM Controller offers comprehensive solutions tailored to the IT sector. From tax optimization to financial management, their specialized services help ensure that your company complies with regulations while minimizing tax liabilities.
By leveraging their expertise, you can confidently navigate the complexities of Brazil’s tax system and focus on growing your business.
