Published in the Official Gazette on April 4th, Provisional Measure 612 brought a significant change to the presumed profit method for the calculation of the Corporate Income Tax by Brazilian entities.
According to the new rule, companies with revenue up to R$ 72,000,000.00 (seventy two million reais) in the previous year, or R$ 6,000,000.00 (six million reais) times the number of months during which the company carried out its activities in the previous year, when less than 12 (twelve) months, may choose to calculate the Corporate Income Tax based on the presumed profit method.
Since such change will be in force only from January 2014 onwards, the existing limit of R$ 48,000,000.00 (forty eight million reais) per year (or R$ 4,000,000.00 per month in case the activities have been carried out for less than 12 months in the previous year) is still valid.
Other important changes have been introduced by Provisional Measure 612, such as:
(i) COFINS-import tax: More than 20 (twenty) NCMs have been added to the list of products that are subject to an additional 1% COFINS-import tax levied on the import, while seven products, all cooper based, have been removed from the same list;
The 1% increase to the COFINS-import tax rate (leading to a 8,6% COFINS-import tax rate) was originally introduced by law 12,715/2012
(ii) Indemnifications foreseen in Law 12,783/2013: Public concessionaries for generation, transmission and distribution of electric energy that receive indemnification for investments made on revertible assets that were not depreciated or amortized, will be subject to a 0% gross revenue tax rate (PIS and COFINS) on such indemnifications;
(iii) INOVAR-AUTO: Main change refers to new provisions regarding the applicability of penalty to those entities that are qualified and do not achieve the energy efficiency goal; and
(iv) Social Security Tax: The list brought by Law 12,546/2011 has been extended and entities engaged in other business activities will, from January 2014 onwards, calculate the social security tax (INSS) based on 2% or 1% of the gross revenue, instead of 20% over the employees gross salaries.
Some of the activities that will be subject to the new calculation method are road and rail passenger transportation, certain activities related to construction and engineering, cargo road-transportation and others.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.