• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 5/1/2013

Brazil - “Presumed profit method” limit is increased 

May 1: Provisional Measure* 612 (published in the official gazette on 4 April 2013) includes a change to the “presumed profit method” ceiling limit amount for purpose of Brazilian entities’ calculation of their corporate income tax.

* In Brazil, a Provisional Measure is an “act” issued by the president, with the authority of law until later approved by Congress. The Provisional Measure is effective as from its date of publication for 60 days, and may be extended for an additional 60-day period (for a total of 120 days).

Under the new provision, effective January 2014, companies with revenue up to R$ 72 million (approximately U.S. $35.9 million) in the preceding year—or R$ 6 million (approximately U.S. $3 million) times the number of months during which the company conducted activities in the preceding year if less than 12 months—may elect to calculate their corporate income tax under a “presumed profit method.”

Until January 2014, the existing limit of R$ 48 million per year (or R$ 4 million per month for a less-than-12-month period of activities) continues to apply. Provisional Measure 612 also contains changes that: (1) add more products to the list of goods subject to the 1% COFINS/import tax; (2) a 0% gross revenue tax on certain electric energy generation concessions; (3) provisions concerning energy-efficiency goals; and (4) social security tax base measures.

Read an April 2013 report prepared by the KPMG member firm in Brazil: Provisional Measure 612/2013 – Higher limit for the presumed profit method, and other issues

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