The importance of due diligence in merger and acquisition processes

10/11/2017

RFB enables filing documents in services requests

16/11/2017

14/11/2017

EXPERT OPINION

Choosing the best tax regime for your business in 2018

Therefore, all companies are required to annually establish the tax system that will be considered in calculation and in taxes payment, where the three existing types are mentioned: Actual Profit, Presumed Profit, and Simples Nacional.

How to choose the tax system?

Each company should perform the calculations to identify what is the most appropriate taxation form, beneficial and less affect its cash flow. Such calculations should consider all taxes applicable to the company's operations: Income tax, social contribution, IPI, PIS, COFINS, INSS, ISS (service providers) and/or ICMS (commercial companies), and their nuances. It is noteworthy that the participation of a good accountant is essential that assessment.

The advantages or disadvantages for each company depend on many variables. For example: number of employees, revenues ranges for the last twelve months, growth from one year to the other, profitability, activity practiced, etc. Companies should analyze the option for taxation form, considering the business behavior and planning for the coming months, in order to decide for the best taxation form.

Taxation systems

1) Actual Profit

The Actual Profit is a taxation form that all companies may adopt, regardless the business or turnover line, allowing prior period losses compensation. As this is a more complex system, it requires a very well made bookkeeping, as well as an accessory obligations number.

The profit margin of the company should be considered, since the Actual Profit starts from accounting profit adjusted by additions and exclusions, according to tax laws.

This option in most cases, for PIS/COFINS, the company should calculate by non-cumulative regime. At this point, the credit restrictions that the activity should be considered, since the company may be saving on income tax and social contribution and losing in the PIS/COFINS in opting for the Actual Profit, as the rates sum is 9.25%.

The option for Actual Profit generally does not influence on ICMS, IPI, and ISS calculations and on their accessory obligations, contrary to what happens in the Simples Nacional.

2) Presumed Profit

The Presumed Profit is a simplified taxation form of Income Tax of Legal Entities (IRPJ) and Social Contribution on Net Income (CSLL), which is through a profit margin presumption according to the company’s activity.

The option is for the company whose total gross revenue in the previous year was equal to or less than seventy-eight million Brazilian Reais (BRL 78,000,000.00) or six million five hundred thousand Brazilian Reais (BRL 6,500,000.00) multiplied by the months in activity from the previous year, when less than twelve (12) months, subject to other conditions provided for in legislation.

It is noteworthy that some companies may not opt for this system to the detriment to the performed activities and his expressed prohibitions into law, even if they are framed in the gross revenue earned limit.

If the company has a profit margin exceeding the values established by the RFB, applying the primarily established percentage should be more advantageous.

For PIS/COFINS, the company, by opting for Presumed Profit, should calculate it on a cumulative basis and the rates sum is 3.65% on revenue, in which case, discount credits from these contributions is forbidden.

As for ICMS, IPI and ISS, the option for the Presumed Profit, as well as the Actual Profit, generally does not influence their calculations and accessory obligations, different from what happens in the Simples Nacional system.

3) Simples Nacional

The Simples Nacional is a special tax system provided for in the Complementary Law 123/2006, with subsequent amendments. Taxes for all federal agencies (Federal, State, Federal District and Municipalities), i.e. income tax, social contribution, PIS, COFINS, IPI, ICMS, ISS and Contribution to Social Security intended to Social Security up to legal entity (CPP) are covered in it, which are collected through the single collection document for Simples Nacional, the “Documento de Arrecadação do Simples Nacional – DAS”.

The collection is based on the percentage listed in the Annexes of Complementary Law 123/2006, and focus on revenue. Despite an apparent simplification, it is far from simple, as the taxpayer should consider many rules and exceptions.

You should always perform the calculations, there may be a disadvantage in some situations involving ICMS and PIS/COFINS.

It is noteworthy that the entrepreneur needs to keep up with changes in the system. From Jan-01-2018, among other changes, there will be:

a) Extension of revenue limit: from BRL 3.6 million to BRL 4.8 million, for Micro and Small Businesses; and BRL 60 thousand to BRL 81 thousand to Individual Microentrepreneurs (MEI);

b) Changes in rate influence form;

c) Decrease in number of tables and income ranges;

d) Increase in participants, which may opt for Simples Nacional;

e) Creation of investor-angel figure;

f) Creation of other requirements to access special credit lines.

In addition to features involving the Simples Nacional, the companies meeting the framework requirements should attempt to registration deadline. The taxpayers should provide the request for optiot to Simples Nacional throughout January of every year, up to the last business day. Once approved, its effects are from the first day of the year of the option.

For 2018, the deadline is Jan-31-2018. After that, the option will only be possible in January of the following year.

How DPC may help your company?

Domingues e Pinho Contadores has specialized team ready to assist your company.
Contact us by the e-mail dpc@dpc.com.br

Author DPC

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<h2>Choosing the
best tax regime for your business in 2018</h2>

Therefore, all
companies are required to annually establish
the tax system that will be
considered in calculation and in taxes payment, where the three
existing types are mentioned: Actual Profit, Presumed Profit, and Simples
Nacional.

<h4>How to
choose the tax system?</h4>

Each company
should perform the calculations to identify what
is the most
appropriate taxation form, beneficial and less affect its cash flow. Such calculations
should consider all taxes applicable to the company’s
operations: Income tax, social contribution, IPI,
PIS, COFINS, INSS, ISS (service providers)
and/or ICMS (commercial companies), and their nuances. It is noteworthy that
the participation of a good accountant
is essential that assessment.

The advantages or
disadvantages for each company depend on many variables.
For example: number of employees, revenues
ranges for the last twelve months, growth from one
year to the
other, profitability, activity practiced, etc. Companies should analyze the option
for taxation form, considering the business behavior and planning
for the coming months, in order to decide for the best taxation form.

<h4>Taxation systems</h4>

<h4>1) Actual
Profit</h4>

The Actual Profit is a taxation form
that all companies may adopt,
regardless the business or turnover line,
allowing prior period losses compensation. As this is a more complex system, it requires a very well made
bookkeeping, as well as an accessory obligations
number.

The profit margin
of the company
should be considered, since the Actual Profit starts from accounting profit adjusted by additions and
exclusions, according to tax laws.

This option
in most cases, for PIS/COFINS, the
company should calculate by non-cumulative regime. At this point,
the credit restrictions that the activity should
be considered, since the company
may be saving
on income tax and social contribution and losing in the PIS/COFINS in opting for the Actual Profit, as the rates sum is 9.25%.

The option for Actual
Profit generally does not influence on ICMS, IPI, and ISS calculations and on their
accessory obligations, contrary to what
happens in the Simples
Nacional.

<h4>2) Presumed
Profit</h4>

The Presumed Profit is a simplified taxation form of <a href=”http://www.contabeis.com.br/termos-contabeis/irpj”>Income
Tax of Legal Entities (IRPJ)</a> and <a
href=”http://www.contabeis.com.br/termos-contabeis/csll”>Social Contribution on Net Income (CSLL)</a>, which is through a profit
margin presumption according to the
company’s activity.

The option is
for the company whose total gross revenue in the previous year was
equal to or less than
seventy-eight million Brazilian Reais (BRL 78,000,000.00)
or six million
five hundred thousand Brazilian Reais (BRL
6,500,000.00) multiplied by
the months in activity from the
previous year, when less than
twelve (12) months, subject to other
conditions provided for in legislation.

It is noteworthy
that some companies may not opt
for this system to the detriment to
the performed activities and his expressed prohibitions
into law, even if they
are framed in the gross revenue earned
limit.

If the company has a profit
margin exceeding the values established
by the RFB, applying the primarily
established percentage should be more advantageous.

For PIS/COFINS, the company, by opting
for Presumed Profit, should
calculate it on a cumulative basis and the rates sum is 3.65% on revenue,
in which case, discount credits from these
contributions is forbidden.

As for ICMS, IPI and ISS, the option for the Presumed Profit, as well as the Actual
Profit, generally does not influence their calculations and accessory obligations, different from what happens in the Simples Nacional system.

<h4>3) Simples Nacional</h4>

The Simples Nacional is a special tax system provided for in the Complementary Law 123/2006, with subsequent amendments. Taxes for all federal agencies (Federal, State,
Federal District and Municipalities), i.e. income tax, social contribution, PIS, COFINS, IPI, ICMS, ISS and Contribution to Social Security intended to Social Security up to legal entity (CPP) are covered in it, which are collected through the single collection document for Simples Nacional, the
“Documento de Arrecadação do Simples Nacional – DAS”.

The collection is
based on the percentage listed in the Annexes
of Complementary Law
123/2006, and focus on revenue. Despite
an apparent simplification, it is far from simple,
as the taxpayer should consider many rules and
exceptions.

You should
always perform the calculations, there may be
a disadvantage in some situations
involving ICMS and
PIS/COFINS.

It is noteworthy
that the entrepreneur needs to keep up
with changes in the system. From Jan-01-2018, among other changes,
there will be:

a) Extension of revenue limit:
from BRL 3.6 million to BRL 4.8 million, for Micro and Small Businesses; and BRL 60 thousand to BRL 81 thousand to Individual Microentrepreneurs
(MEI);

b) Changes in rate influence form;

c) Decrease in number of tables
and income ranges;

d) Increase in participants, which may opt for Simples Nacional;

e) Creation of investor-angel figure;

f) Creation of other requirements
to access special credit lines.

In addition to
features involving the Simples Nacional, the companies meeting the framework requirements should attempt to registration
deadline. The taxpayers should
provide the request for optiot to Simples Nacional throughout January of every
year, up to the last
business day. Once approved, its effects are from the first
day of the
year of the
option.

For 2018, the deadline is Jan-31-2018. After that, the option
will only be possible in January of the
following year.<

The importance of due diligence in merger and acquisition processes

RFB enables filing documents in services requests

EXPERT OPINION

Choosing the best tax regime for your business in 2018

How to choose the tax system?

Taxation systems

1) Actual Profit

2) Presumed Profit

3) Simples Nacional

How DPC may help your company?

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