International Tax Alert - August 2015
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New Corporate Income Tax Return e-filing Requirements (ECF)
This new requirement is effective for 2014 calendar year tax returns and Brazilian taxpayers have until September 30, 2015, to comply with these new requirements under Normative Instruction 1,524/2014.
The ECF e-filing process is mandatory for companies that calculate their income tax under the actual, presumed, or arbitrated profit methods, as well as entities that are exempt from Brazilian income tax. The only exception is granted to companies under the SIMPLES method, public entities, or inactive legal entities under Normative Instruction 1,422/2013.
The new ECF e-filing requirement applies to the reporting of all tax information concerning the Brazilian corporate income tax (“IRPJ”) and the social contribution tax (“CSLL”) calculations. The ECF will replace the current income tax return (“DIPJ”) process.
The ECF filing consists of 14 forms which include submission of the following information:
- A detailed calculation of the IRPJ and CSLL including tax adjustments.
- Chart of accounts and accounting records used by the company to support the tax calculation and the company’s financial statements.
- Tax and administrative proceedings related to the IRPJ and CSLL.
- Tax exemptions, benefits, or credits.
- Transfer Pricing information.
- Information on all payments made to shareholders and directors and entities abroad for services provided.
- Related parties and subsidiaries (in Brazil and abroad).
- Withholding taxes.
- General and economic information.
Penalties can be imposed for late filing or errors. These include 0.25% of the company’s net income for each month (up to 10%) in the case of late filings and 3% of the amount omitted or reported in error. These penalties may be reduced or eliminated in some circumstances.
How BDO Can Help
All Brazilian taxpayers should consider the complexities and challenges of this new e-filing requirement because of the new technical layout, analytics, and accounting records required to be reported. Tax returns are filed electronically in Brazil and Tax Authorities are able to crosscheck the information among the several different returns, issuing notifications and penalties.
BDO can review internal processes and controls to ensure sound governance, and crosscheck the information among the tax returns to ensure that fillings are made correctly to avoid potential penalties.
For more information, please contact one of the following practice leaders: