ECD x ECF: prior review minimizes tax risks

29/04/2019

EXPERT OPINION

ECD x ECF: prior review minimizes tax risks


In the same way as with the individual, legal entities must also report the Income Tax. The ECF, Accounting-Tax Bookkeeping, which in 2014 replaced the DIPJ, Legal Entity Economic and Tax Information Report, is part of the SPED, Public System of Digital Bookkeeping, package which centralizes some accounting and tax obligations. One of them is the ECD, Digital Accounting Bookkeeping, which is tied to the ECF and both are transmitted respectively in May and July.

Both ECD and ECF are annual and complementary. While the ECD consolidates the detailed information on the Company's accounting records, the ECF should contain all information related to the composition and the amount due for Social Contribution (CSLL) and Corporate Income Tax (IRPJ).

The main differences between the two obligations, how this data crosses is and how the company can be prepared are as follows:


.

ECD

ECF

WHO SHOULD FILE IT?

Although exempt and immune, pursuant to RFB Normative Instruction 1,252/2012, legal entities are required to:

- They are subject to IR taxation based on actual profit

- That they were taxed based on the presumed profit without incidence of withholding income tax (IRRF), with a portion of profits or dividends, higher than the value of the tax base, reduced by taxes and contributions to which it is subject

Important: Bookkeeping is optional for Simples National companies as well as to the other companies not included in the exposed list.

Legal entities, including those treated as equivalent, were immune and exempt by means of real, presumed, or arbitrated profit, as the case may be.

The exceptions, those that do not fall within the ECF, are:

Companies opting for the Simples Nacional regime;

- Public agencies, municipalities and public foundations;

- Inactive;

Immunities and exemptions are not required to file the EDF Contribuições.

WHAT SHOULD CONTAIN IN THESE OBLIGATIONS?

The proof and validating the following Journals:

- General journal and its auxiliaries, if any;

- General ledger and its auxiliaries, if any;

- Journal Daily Trial Balances, Balance Sheets, and Record Forms of the auxiliaries.

Important: All events occurring as of January 1, 2018 should be included in this year's ECD.

All operations that influence the composition of the Corporate Income Tax (IRPJ) and Social Contribution (“CSLL”).

The digital bookkeeping of the Book of Real Profit Determination (“Lalur”) is compulsory.

Important: In this case, there is no further need to fill out the IPI determination form.

HOW TO SUBMIT AND STORE AT SPED?

It is necessary to prove the authorship of the bookkeeping with the digital signature that must be made with security certificate type A3, issued by an entity accredited by ICP-Brasil.

It is necessary to follow the RFB Guidance Book. Therefore, the transmission should also be made with digital signature, by means of the certificate issued by an accredited entity ICP-Brasil.

Important: The data collected in both cases have specific purposes and are part of the SPED. It is intended to unify the investigation processes of the tax obligations facilitating the completion and filing of this information.

DEADLINES

Until the last business day of may.

Until the last day of the month of July.



How is the crosschecking between ECD and ECF?

Importing the ECD data is the starting point for completing the ECF, i.e., broadly, the ECD is a background to determine the ECF information, as it is complementary.

When the ECF statement is filed in July, the company's balance sheet, which is filed in the ECD, is already closed. In July, with the filing of the ECF, the ECD should reflect the calculation of results, profits, or losses and taxes of the last year. That is, one hits the other and needs to be in compliance.

The system allows the Federal Revenue to cross the ECF and ECD data, also comparing other accessory obligations. During the calculation, for example, Federal Revenue recovers information from Block C of ECF, with information recovered from ECD, including, among other data, the Taxpayer Accounts Plan and the Accounting Balances throughout the calendar year. On the other hand, ECD can also contribute to the filling of ECF blocks, which help in the formation of IRPJ and CSLL bases.

Other crossing possibilities are:

    • EFD-ICMS / IPI data with the Determination of ICMS;

    • EFD-ICMS / IPI data with those of EFD-Contribuições;

    • EFD-ICMS / IPI data and the EFD-Contribuições with XML files;

    • ECD data with EFD-ICMS / IPI and EFD-Contribuições;


The crosschecking of data ensures the legitimacy and uniformity of accounting information and the identification of possible errors and unlawful taxes. Therefore, it is indicated to make the data a review before filing in order to minimize risks and avoid the company's exposure to fines and penalties.


Recent changes in ECD and ECF

The RFB recently issued a standard with changes closely linked to technical issues of system layout for EDC this year.

The most significant and recent changes made by the Federal Revenue were in the last year and can be fully found in the articles:

    • RFB created new rules for ECD. https://dpc.com.br/novas-regras-sobre-a-ecd-foram-criadas-pela-receita-federal/

    • RFB changes rules on amendment of ECF.https://dpc.com.br/receita-federal-altera-regras-retificacao-ecf/


Divergences and inconsistencies are automatically identified by the tax authorities and increasingly close to the taxable event. In view of the growing data crosschecking between the SPED project modules, it is urgent that companies review their processes, promote the integration of the accounting and taxes areas so that the information provided is consistent and coherent.


Rely on experts is essential.

The records review by the tax specialists with the support of suitable analytical software is already part of the routine of the Accounting and Taxes services provided by the DPC to its clients.

For companies that adopt internal accounting, DPC offers taxes consultancy services covering accounting and tax review, including data validation, analysis of tax classification and rates, previous cross-checking of information between statements, raising points of attention and inconsistencies that need to be resolved.

In addition, DPC provides timely reporting to the ECD and ECF, according to the client's needs, as is the case of companies that do not have appropriate software to generate these obligations.

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

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