Important aspects in tax area in 2018

Dealing with the complex Brazilian tax system is a challenging task for companies. However, managing all taxes and accessory obligations and being up to date with the rules changes is critical for any business.

A well-structured tax area is one of the essential ingredients to ensure competitiveness in the market. Domingues e Pinho Contadores, which operates for over than thirty (30) years offering solutions to reduce the taxes burden heaviness and minimizing problems with taxes authorities, drew up a list of what should be a point of attention in 2018:

Simples National

Simples Nacional is a shared collection and control system of taxes applicable to micro and small companies. The mode should undergo changes from January 1, 2018, namely:

I) Extension of revenue limit: from BRL 3.6 million to BRL 4.8 million for micro and small businesses; and from BRL 60,000 to BRL 81,000 to individual small entrepreneurs (MEI);

II) Changes in rate;

III) Decrease in tables and billing range;

IV) Increase in participants that may opt for the Simples Nacional;

V) Creation of "Angel Investor" figure;

VI) Creation of other requirements to access specific credit lines.

eSocial

The country’s digital reporting tool (eSocial), a project that standardizes the procedures for transmission, validation, storage, and distribution of information relating to workers, definitively enters into force in 2018 to all sizes companies. The system will unify the information on workers, such as relationship, social security contributions, payroll, communications of accident at work, prior notices, tax bookkeeping and FGTS information.

The implementation schedule provides for the mandatory adoption of the system in two stages: from 1 January 2018, for companies with a BRL 78 million annual turnover (2016 onward); and, from 1 July 2018, for all companies, from Individual Micro-entrepreneur (MEI) to the multinationals.

EFD-Reinf

Together with eSocial, the Digital Tax Bookkeeping of Withholding and Other Tax Information (EFD-Reinf) replaces many accessory obligations on taxpayers and employers.

From the next year, companies with revenues greater than BRL 78 million in 2016 onward should start filling the EFD-Reinf. From July 2018, even companies with revenues lower than this value should be adjusted.

The EFD-Reinf comprises information that are currently required in Withholding Income Tax Statement (Dirf) and the FGTS Payment Slip and Social Security Information (GFIP), and the Social Security Contribution on Gross Revenue (CPRB).

As eSocial, the EFD-Reinf increasingly requires companies to expand control over their internal processes and coordinate the integrated operations of its various departments.

Block K

The Production and Inventory Record Book, better known as Block K, is a Digital Bookkeeping Public System tool (Sped) in which the detailed data on the industrial companies and wholesalers’ inventory turnover (except those involving the Simples Nacional) must be stated to tax authorities.

The data for stored goods, balance of material, losses in the production process, among other information, should be recorded at Block K. To feed the system, it is necessary to keep a strict internal control, by training professionals involved in the activity and deploying electronic inventory management systems.

The deadlines to deploy the Block K are established by Sinief Adjustment 25/2016.

NF-e

The need for continuous improvement led to update the Electronic Invoice (NF-e) layout version 3.10 to version 4.00, as of November 2017.

Companies should pay attention to the deactivation period of version 3.10, scheduled for April 2, 2018.

ICMS - Tax Substitution

The states will need to make adjustments required by the rules established in ICMS Agreement 52/2017 and the ICMS Covenant 60/2017, which also bring effects to companies.

Among other issues, the use of the Indicator for Tax Substitution (CEST), which already has being deployed by supply chain in accordance with the schedule below:

1. Jul-01-2017, for industries and the importers;

2. Oct-01-2017, for wholesalers;

3. Apr-01-2018, for other economic segments.

ICMS – Sharing EC 87/2015

Constitutional Amendment (EC) 87/2015 introduced a significant change to the concept and calculation of ICMS on interstate transactions with non-taxpayers final consumers. These operations with taxpayer or non-taxpayer now have the same applicable ICMS rates, in other words, the origin federative unit rates were no longer used in transactions with non-taxpayer final consumers, but the interstate rates, as in any another operation.

A transitional rule was also established to adapt the states’ cashes being, then, the shared differential rate between origin and destination states ranging from 2016 to 2019.

For 2018, a sharing percentage among the states should be applied at ICMS payment, as follows:

• 80% (eighty percent) to the destination state;
• 20% (twenty percent) for the origin state.