Brazil's Tax and Trade Policies under the Rousseff - Brazil-US ...

Brazilian Corporate TaxationTaxation on Profits: Corporate Income Tax (“IRPJ”) and Social Contribution on net Profits(“CSLL”)• Brazilian companies are subject to IRPJ, at the rate of 15% plus an additional rate of10% on any income exceeding R$ 240,000¹ on an annual basis or R$ 20,000 on amonthly basis, and CSLL, at the rate of 9%• Both IRPJ and CSLL are levied on the company’s profits, calculated in accordancewith: (i) the Real Profit Method (“RPM”) or (ii) the Presumed Profit Method (“PPM”)• The election of RPM or PPM is, as a rule, discretionary to the taxpayer. However,under Brazilian tax legislation, the RPM is mandatory for companies: (i) whose totalannual revenue in the prior year exceeded R$ 48,000,000, (ii) that generate income orgains abroad, (iii) which are financial institutions, (iv) which are factoring companies, or(v) which are entitled to specific tax incentives and exemptions• Please note that there is no specific rule for newly-incorporated companies in regard ofthe first requirement. In our understanding, once the requirements above are observed,the newly formed company may adopt whichever method that might bring tax efficiencyfor the business