Tax-Accounting Bookkeeping is an obligation for companies, which collects all the information reported during the previous calendar year. Therefore, it is important a thorough review in order to avoid doubts from the Treasury and penalties.
The filing period of the ECF Tax-Accounting Bookkeeping (ECF) referring to the 2018 calendar year and special situations of 2019 (*) has already begun. By July 31, the last business day of the month, companies under Real Profit, Arbitrated Profit and Presumed Profit, even if they are immune or exempt, must file this obligation. Companies opting for the Simples Nacional, municipalities and foundations and public agencies are not under this rule.
(*) The special situations are spin-off, merger, incorporation or extinction of companies. If one of the special situations occurs between January and April, the filing deadline is the last business day of July of the year of bookkeeping. If it occurs between May and December, the filing deadline is the last business day of the third month following that of the event.
The ECF is an accessory obligation established in 2015 replacing the DIPJ (Statement Economic-Tax Information of the Legal Entity), and companies (Legal Entities) established in Brazil must fill and submit it.
The main ECF purpose is a crosschecking of the accounting and tax data related to the calculation of Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL), increasing the effectiveness of the inspection process through digital data crossing.
This is a complex obligation made of 14 blocks, which is the income of all the accounting work of the company, validating even, data already stated in other obligations.
For this reason, the preparation of this statement must be detailed, given the growing data crossing and the possibility of penalties due to the misinformation. We detail below some of the measures that are required in the preparation of the ECF.
With networked systems, the reports data that the company provides to the RFB go through innumerous automatic crossings. The contradictions can lead to questions from the Treasury and to the need for rectification, in addition to reworking for the company.
In July, the ECF report is filed and must comply with the Digital Accounting Bookkeeping (ECD), delivered in May. We can say that these two obligations complement each other, since the calculation of the income, the profits or losses and the taxes of the last financial year in the ECF must be reflected in the ECD.
Read more at: ECD x ECF: prior review minimizes tax risks
Another example of crossing is in the Statement of Federal Tax Liabilities and Credits (“DCTF”), where also the values of Income Tax and Social Contribution are reported.
The installments paid to Members, such as remuneration, profits and dividends, must be reported to the ECF. These values should be in accordance with those reported in the DIRF.
The paying source must report the company’s tax credits of IRPJ and CSLL in the ECF. These values shall be in accordance with income earned from reports or by e-CAC report.
Any inconsistency may be amended within five years, but the company may be subject to a penalty imposed by the Federal Revenue. Therefore, a prior validation and review of the information is essential. In addition, having a set-up accounting system in accordance with the latest ECF layout not only ensures greater accuracy but also minimizes the chance of inaccuracies in the transmission of the obligation, avoiding errors and delays.
In order to transmit the ECF, it is necessary to have the Digital Certificate up to date. Therefore, it is essential to validate before the deadline to submit the obligation. Thus, the company avoids delays and inconveniences.
Read more about Digital Certificate: Digital certificate: what is and how to use to meet obligations with the Treasury
In addition to being an essential requirement for transactions of assets and realization of loans, companies that bid are also required to attest their legal status with the Tax Authorities and the document certifying this is the Non-Overdue Liability Certificate (CND). However, in order to comply with the CND, the companies should also comply with the ECF filed and with no pending issues.
The ECF has also a direct link to Electronic Application for Reimbursement, Refund (“PER”) and Declaration of Tax Credit Offset (DCOMP). The company that has IRPJ (Corporate Income Tax) and CSLL (Social Contribution on Net Income) credits may offset the federal taxes through PER/DCOMP. However, in order to apply for it, the legal entity must to prove such credits and, therefore, have already filed all the obligations, among them the ECF, stating the credit base. This means that the taxes offset or refund can only occur as of August, since the deadline to file the ECF is July 31.
Transfer Pricing is a calculation applied to operations among related companies when one of them is overseas. As they are part of the same entity, the property, assets and services could be negotiated at prices lower than those practiced in an open market, which would lead to distorted results for the business group.
In the case of multinational companies, it is necessary to state in the ECF the Transfer Price calculations of the procedures that involved turnover of foreign exchange. This is a delicate step that requires the support of experts, considering the quantity of operations that multinational companies can perform during a year.
Each operation must be reported and, therefore, it is recommended the performance of calculation be monthly to avoid accumulation of data at the end. In addition, the Transfer Price calculation is performed in order to observe if the company is making a number of transactions over than the permitted under Brazilian law. When the amount is over the limits imposed by the legislation, this exceeding amount must be added in the calculation of the real profit in December.
ECF reflects the accounting work of the company for a whole year. Therefore, it is so important to be aware of the particularities of this obligation. Domingues e Pinho Contadores seeks the most effective ways to prepare and file the ECF. Paying special attention to the prior review of all information provided, to the crosschecking with other obligations and data already stated, always with the analytical and strategic eye of our specialists in order to guarantee total confidence and ease for our clients.
Domingues e Pinho Contadores has specialized team ready to assist your company.
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