News

1 – For Individuals

Income Tax

Filing of Income Tax returns have been postponed from April 30^th to June 30^st, 2020.

2 – For Corporations

a) IPI (Tax on Industrialized Products – Federal VAT) Reduction 

On April 1st, Presidential Decree 10.302/2020 was published in the Official Gazette, in an extra edition, which reduces the IPI rates of the following products to zero:

• Laboratory or pharmacy articles – Tax Code 3926.90.40
• Gloves, mittens and the like, except for surgery – Tax Code 4015.19.00
• Clinical thermometers – Tax Code 9025.11.10

The reduction is applied until September 30 this year. 

b) IOF (Tax on Financial Operations) reduction

This Friday, April 3, Decree 10,305 / 2020 comes into force, which temporarily reduces the IOF tax rate on financial transactions.

The reduction to zero will be applied between April 3 and July 3, 2020, both for the main rate of 0.38% on credit and for the daily rates calculated at 0.0041% when transactions between legal entities and 0.0082 % when transactions with legal entities and individuals.

The reduction will be applied to the following credit operations:

a) loan operation in any form, including credit opening;

b) discount transactions, including the sale of credit rights factoring companies resulting from credit sales;

c) in advance to the depositor, granted by the bank to cover any outstanding balance in the current account;

d) loans, including in the form of financing, subject to the release of funds in installments;

e) limit of bank accounts overdrafts;

f) in loan operations, discount operations, advance to the depositor, financing, excess limits, when the borrower opts for Simples Nacional (The National simplified taxation system for SMEs);

g) in financing operations for the acquisition of non-residential properties, in which the borrower is an individual;

h) in the extension, renewal, confession of debt and similar business, of a credit operation in which there is no substitution of a debtor;

i) in credit operations not settled at maturity, whose taxation of the main rate has not reached the term of 365 days, subject to extension or renewal.

c. “S” system – reduction

On 03/31/20, the government published Provisional Measure 932 that reduces the amounts that are compulsory for companies to System S entities in the GPS – Social Security Guide.

The reduction will be of 50% until 06/30/2020 in the rates destined to Sebrae, Sescoop, Sesc, Senac and Senat and Senar, applied in the collection forms referring to the competences of April, May and June 2020 by the companies.

As a rule, companies collect 5.8% referring to System S, which may be reduced to 2.9% in the period up to June 2020.

3 – Extension of deadline for payment

a) ICMS-PR (State VAT) 

Brazil has 27 different State VAT systems. We chose to exemplify the Paraná State changes. Some states produced very similar changes. We will be pleased to summarize the preferred State changes.

The extension provided for in the decree refers to:

• Tax due for goods leaving or the beginning of installments, when dealing with the tax due by the Tax Substitution regime – ST;
• ICMS due to the differential rates for the acquisition of goods for use/ consumption and fixed assets in other states.

The amendment also included, through Decree 4.411 / 2020, the postponement of the payment of ICMS Anticipation (advance payment), due by ME and EPP (Small and micro companies) opting for Simples Nacional, in the acquisition of goods, from other states, for commercialization or industrialization, when they come taxed at a rate of 4%.

It is worth remembering that the differential ICMS of advance tax rates does not reach the goods subject to the tax substitution regime.

Due-dates were extended as follows:

• Calculation Period 03/2020, due as of June 30, 2020;
• Calculation Period 04/2020 due as of July 31, 2020;
• Calculation Period 05/2020 due as of August 31, 2020.

b) Social Contributions

Through Decree 139 of 04/03/2020, the deadline for payment of federal taxes was extended due to the pandemic related to Coronavirus.

The social security contributions corresponding to the employers ‘social security (corresponding to 20% and RAT), the domestic workers’ social security and the contributions to PIS and COFINS, related to the powers of March and April 2020, which would expire in April and May, are extended for payment in August and October, respectively.

c) Ancillary obligation – extensions

Normative Instruction (Brazilian IRS) 1.932 of 02/03/2020 extended, on an exceptional basis, the deadline for delivery of ancillary obligations:

• DCTF originally scheduled to be transmitted until the 15th business day of April, May and June 2020, may be transmitted until the 15th business day of July 2020;
• EFD Contributions originally scheduled to be transmitted by the 10th business day of April, May and June 2020, may be submitted until the 10th business day of July 2020.