Main taxes and how they appear in the Balance Sheet and DRE

14/07/26 •0•0

Taxes are necessary for us to live in society and will always be part of our daily lives. Let's see all types of taxes and how they behave on the Balance Sheet

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What types of taxes do we pay?

You have certainly wondered what types of taxes you need to pay. In Brazil, taxes are divided into federal, state, and municipal taxes. In other words, when you pay them, that amount is allocated to one of the three.

They may be charged to individuals or legal entities, such as consumers, companies, and even owners (as is the case with IPVA, for example).

See the main ones now:

Federal taxes

Import Tax

II – Import Tax: applies to products purchased in foreign territory and is the responsibility of the Federal Government;

Today, the simplified import tax rate is 60%.

Tax on Financial Transactions

IOF – Tax on Financial Transactions: applies to financial transactions such as loans, financing, foreign exchange and securities transactions, credit, insurance, as well as stocks, among others;

IOF rates below:

Transaction	IOF Rate
International card purchases	6.38%
Credit card revolving credit	0.38% + 0.01118% per day
Overdraft	0.38% + 0.01118% per day
Personal loan	0.38% + 0.01118% per day
Financing (except residential properties)	0.38% + 0.01118% per day
Life and personal accident insurance	0.38%
Private health insurance	2.38%
Property insurance (including vehicles)	7.38%
Purchase of foreign currency	1.10%
Transfer of funds from abroad to Brazil	0.38%
Transfer of funds from Brazil abroad	1.1% (same ownership) and 0.38% (third parties)
Fixed-income investments	Up to 96% on earnings, depending on the time of redemption

Tax on Industrialized Products

IPI – Tax on Industrialized Products: applies to the value of imported products and nationally industrialized products. Here, only industry owners need to pay it;

The IPI is different for each product, so you should access the Federal Government website to check the tax rate percentage for the product you are selling.

Individual Income Tax

IRPF – Individual Income Tax: applies to workers’ income;

Calculation Base (R$)	Rate (%)	Income Tax Deduction (R$)
Up to R$ 2,112.00	0	R$ 0
From R$ 2,112.01 to R$ 2,826.65	7.5	R$ 158.40
From R$ 2,826.66 to R$ 3,751.05	15	R$ 370.40
From R$ 3,751.06 to R$ 4,664.68	22.5	R$ 651.73
Above R$ 4,664.68	27.5	R$ 884.96

Corporate Income Tax

IRPJ – Corporate Income Tax: applies to company profits;

The IRPJ rate is 15% on actual, presumed, or arbitrated profit. However, if the profit is greater than R$ 20,000 per month, there may be an additional 10% on top of the portion.

But not all companies perform this calculation. The IRPJ rate is 6% for companies that:

- Provide collective passenger transportation;

- Electric power and telecommunications concessionaires;

- Basic sanitation companies.

Rural Land Property Tax

ITR – Rural Land Property Tax: charged on rural properties (rural property owners or usufructuaries/titleholders). The Taxable Bare Land Value (VTNT) is obtained by multiplying the VTN (Bare Land Value) by the quotient between the taxable area, defined in art. 9, and the total area of the rural property.

Contribution for Intervention in the Economic Domain (CIDE)

Cide – Contribution for Intervention in the Economic Domain: applies to natural gas, petroleum and derivatives, such as alcohol and fuel. Those who must pay are fuel producers, importers, and formulators nationwide;

Cide-fuels will apply in the domestic market, as well as to imports, with the following rates: (Law No. 10,336, of 2001, arts. 5 and 9; Decree No. 5,060, of 2004, art. 1)

a) R$ 100.00 (one hundred reais) per cubic meter of gasoline and its streams;

b) R$ 50.00 (fifty reais) per cubic meter of diesel oil and its streams; and

c) zero, for the following products:

I - aviation kerosene;

II - other kerosenes;

III - high-sulfur fuel oils;

IV - low-sulfur fuel oils;

V - liquefied petroleum gas, including that derived from natural gas and naphtha; and

VI - fuel ethyl alcohol.

Contribution for the Financing of Social Security (Cofins) and PIS/Pasep

Cofins – Contribution for the Financing of Social Security: aimed at Brazilian companies and charged based on annual gross revenue (micro and small companies registered under the Simples Nacional regime do not need to contribute);

PIS/Pasep – Social Integration Program and Public Servant Asset Formation Program: charged to companies and serves as a social contribution.

As a general rule, under the cumulative regime, the rates are 0.65% for PIS and 3% for Cofins; under the non-cumulative regime, 1.65% and 7.6%, respectively. On financial revenues, the current combined rate is 4.65%.

Social Contribution on Net Profit (CSLL)

CSLL – Social Contribution on Net Profit: applies to the net income of legal entities;

Bill 1916/22 establishes progressive rates for the Social Contribution on Net Profit (CSLL) for companies with net profit above R$ 10 billion. Today, the contribution is 9% for companies in general and 15% for financial institutions and private insurance and capitalization companies.

Severance Indemnity Fund (FGTS)

FGTS – Severance Indemnity Fund: applies to the income of Brazilian workers with a formal employment contract and is deposited by the company. It is usually a deposit equal to 8% of the employee’s gross salary.

National Social Security Institute (INSS)

INSS – National Social Security Institute: a percentage of each employee’s salary is collected from the company and the worker. The tax is intended for retirement, death pension, sickness benefit, accident benefit, and other benefits;

Contribution Salary (R$)	Progressive rate for INSS contribution purposes
Up to R$ 1,320.00	7.5%
From R$ 1,320.01 to R$ 2,571.29	9%
From R$ 2,571.30 to R$ 3,856.94	12%
From R$ 3,856.95 to R$ 7,507.49	14%

State taxes

Tax on the Circulation of Goods (ICMS)

ICMS – Tax on the Circulation of Goods: applies to various nationwide services, such as imports, telecommunications, interstate or intermunicipal transport, provision of services, among others;

Tax on the Ownership of Motor Vehicles (IPVA)

IPVA – Tax on the Ownership of Motor Vehicles: tax charged to owners on the ownership of motor vehicles that circulate on land;

This amount can vary between 1% and 4%. Each state can adopt its own rate, with São Paulo, for example, charging 4% for vehicles, while Piauí charges 2.5%.

Tax on Inheritance and Donations (ITCMD)

ITCMD – Tax on Inheritance and Donations: applies to inheritances and donations. It falls under the authority of the Federal District and the Brazilian states.

4% (four percent) on transfers causa mortis; and 2% (two percent) on transfers by donation. The tax calculation basis is the market value of the assets or rights or the value of the security or credit transferred, determined through an assessment carried out by the State Treasury.

Municipal taxes

Urban Building and Land Property Tax (IPTU)

IPTU – Urban Building and Land Property Tax: applies to the ownership of real estate, which may include residences, industrial warehouses, commercial or residential buildings, land, etc.;

Calculated based on the market value of the property, and its classification between predominantly residential and other properties, with this rate varying between 1% and 1.5%.

Service Tax (ISS)

ISS – Service Tax: charged to companies and self-employed professionals for each service provided.

It varies according to the city, but generally ranges between 2% and 5% (minimum and maximum rates, as defined by law) on the value of the service performed.

Tax on Inter Vivos Transfer of Real Estate (ITBI)

ITBI – Tax on Inter Vivos Transfer of Real Estate: also known as SISA, applies to the transfer of ownership of houses, buildings, and real estate.

The tax will be calculated by applying the following rates to the calculation basis:

· For transfers included in the Housing Finance System (SFH) and the Residential Leasing Program (PAR), as well as those involving Social Interest Housing (HIS), the rate of 0.5% (half a percent) applies to the amount effectively financed, up to the maximum limit of R$ 68,843.97.

· On the remaining amount exceeding the limit of R$ 68,843.97, whether financed or not, the rate of 2% (two percent) applies. The tax to be paid will be the algebraic sum of these two portions.

· In all other transactions, the rate of 2% (two percent) applies to the calculation basis.

Tax = (F) 0.005 + (BC - F) 0.02

“Outside” and “inside” taxes

An inside tax is when the amount of tax is applied to its own calculation basis and is embedded in the invoice. That is, the tax applies to itself, not only to the value of the product.

An outside tax is when the amount of tax applies only to the value of the product, in a simpler and more straightforward way. And the final value of the product will include the addition of this tax, forming part of the total invoice amount.

Inside example: Product value: R$ 1,000.00. ICMS: 12%. ICMS shown on the NF-e = 1,000 x 12% = 120.00. Product value WITHOUT ICMS: 1,000 – 120 = R$ 880.00.

Outside example: We would have the product value of R$ 880.00 as the basis for ICMS, and at the rate of 12%, the tax amount would be 105.60. And the total product value would be R$ 985.60.

Tax withholding

Tax withholding — or withholding at source — is a situation in which, when payment is made for products or services, the Federal Government transfers the obligation to collect taxes to the payers. An example is the case of an employee who receives R$ 5,000.00 per month, has a formal employment contract, and the company already sends the percentage related to Income Tax to the Government every month. Note that, instead of the employee paying the IR amount directly to the tax authority, the company already makes this collection, deducting the percentage from the employee’s salary and passing it on to the Government.

In addition to the case we mentioned, there are many other situations involving individuals and legal entities in which tax withholding occurs. Through this process, the Tax Authority improves collection, increasing the chances of receiving taxes on time. Companies required to withhold taxes are those under the Actual Profit and Presumed Profit tax regimes, regardless of the segment. The percentage of this withholding varies according to the company’s activity, but taxation generally ranges from 1.5% to 4.65%.

Taxes on the Balance Sheet: asset or liability?

Regarding taxes, there are three possibilities: Collect; Refund; and Recover.

Taxes payable

Taxes payable means fulfilling your tax obligations, that is, paying taxes.

For example, let’s suppose your company is classified under Simples Nacional and every month you issue the DAS, which is the collection form. You pay this form, correct? Therefore, you are dealing with taxes payable.

So, are taxes payable an asset or a liability? The answer is: liability! Since we are talking about a duty, an obligation of your company, just remember the concept of liability, which was explained at the beginning of this content.

Taxes to be refunded

Taxes to be refunded are when you make a request to recover tax credits, for example. This happens when taxes are overpaid, and it is identified by an accounting professional. After identifying the loss, it is possible to request tax recovery.

If there is a situation involving ICMS to be refunded, for example, then yes, we would be dealing with an asset.

Taxes to recover

Taxes to recover are credit amounts greater than a company’s debits after calculating the balance sheet, which can be used as a discount when paying future taxes. They exist when the company pays the same tax more than once and therefore generates a balance to be recovered.

For example, imagine a production chain formed by the wood supplier “Madeirex,” which sells its raw material to the furniture manufacturer “Imolar.” During the sale of the input, “Madeirex” included in the price of its products the amount paid as X% in taxes.

At the other end, "Imolar" sells its furniture to the retailer "Varejo do Fulano". Likewise, during this transaction, Imolar again has to collect the taxes and pay them to the tax authorities. Did you notice that "Imolar" paid the same tax twice? This is considered illegal under the constitution, but the tax must be collected.

For this, a compensation system was created — recoverable taxes. Everything that was paid twice returns to Imolar in the form of a tax credit. Otherwise, at each step in the production chain, goods would become increasingly expensive, and it would be impossible for companies to deal with the high tax liability, as well as for the end consumer.

What happens in a tax credit situation?

Every company that collects taxes subject to double taxation is entitled to a tax credit. However, you must pay attention to the nature of the tax. For example, you cannot use compensation arising from IPI to reduce your ICMS debts.

Notice through the chain how we can pay the same tax several times, allowing you a tax credit

After all, the former is a federal tax, which goes to the Union's treasury, while the latter is state-level, directed to the State Treasury Department. These recoverable taxes, for all other purposes, must be classified as financial assets of your business.

Therefore, there may be a situation in which you receive a tax credit and are reimbursed by the government.

Exercises

1) (Foundation for the Entrance Exam of São Paulo State University - VUNESP - 2019) Regarding the incidence of taxes on the purchase and sale of goods, unlike ICMS, IPI is called

A) an outside tax, since the rate is applied to the product price.

B) an outside tax, since the rate applied is part of the final price.

C) an inside tax, since the rate is applied to the product price.

D) an inside tax, since its amount is part of the product price.

E) an inside tax, since transactions from other states are deducted from its amount.

2) (Brazilian Accounting Foundation - FBC - 2012) A business entity acquired, in June, 100 units of a product at a unit price of R$10.00, with ICMS included in the price at 18%.

In another acquisition, still in the same month, but from an out-of-state supplier, the invoice showed the following amounts: Quantity acquired: 200 units. Unit cost: R$9.00. Total invoice amount: R$1,800.00. ICMS rate: 12%.

Still in June, the 300 units were sold at a unit price of R$15.00. The ICMS rate for the sale transaction is 18%. Select the option that presents the Gross Profit amount in June.

A) R$890.00.

B) R$1,226.00.

C) R$1,286.00.

D) R$1,394.00.

3) (Center for Selection and Promotion of Events UnB - CESPE CEBRASPE - 2008) A company had a balance of ICMS recoverable of R$20,000.00 and ICMS payable of R$45,000.00. The company acquires goods for resale in the amount of R$70,000.00, with ICMS of 17%. The recording of the ICMS payment for the period, using tax credits, must be a debit to ICMS payable in the amount of R$45,000.00, a credit to ICMS recoverable of R$31,900.00, and a credit to cash of R$13,100.00. TRUE or FALSE?

4) (Foundation for Socioeconomic Studies and Research - FEPESE - 2022) Volentieri company hired, for R$10,000, a company not opting for Simples Nacional to provide it with document translation services (a service characteristically of a professional nature). In this case, when making the payment to the contractor, Volentieri company must withhold, as income tax at source, the amount of:

A) R$2,750.

B) R$2,000.

C) R$1,100.

D) R$150.

E) R$50.

5) (SELECON - 2023 - Municipality of Nova Mutum - MT - Tax Inspection Agent) Under the terms of the Tax Code of the Municipality of Nova Mutum (Complementary Law 184/2018), updating the monetary value of the IPTU (Urban Building and Land Property Tax) calculation base by an official index constitutes:

A) an increase in the tax, subject to compliance with the relevant constitutional principles

B) an update of the tax assessed ex officio by the inspection agent

C) an automatic increase in the tax, recognized by decree of the Mayor

D) a mere update, which does not represent a tax increase

6) (VUNESP - 2023 - CAMPREV - SP - Accountant) A commercial entity purchased in cash 90,000 units of goods for resale at a value of R$4.50 each. It is known that the supplier does not provide freight service and, for this reason, the entity hired another entity that charged freight in the amount of R$3,600.00 so that the goods would be available to be sold.

It is known that ICMS of 12% is levied on the purchase of goods, which is recoverable for the entity's sector of activity.

Considering the information presented, it is correct to state that the unit cost of the goods acquired, in R$, was:

A) 3.96

B) 4.00

C) 4.50

D) 4.54

E) 5.00

7) (Avança SP - 2021 - Municipality of Vinhedo - SP - Revenue Inspector) The exit of domestic or nationalized products from the national territory constitutes the taxable event for the following tax:

A) IE.

B) ISS.

C) IOF.

D) ICMS.

E) ITBI.

8) (FGV - 2023 - CGE-SC - State Auditor - Accounting Sciences - Afternoon (Specific Knowledge)) Select the option that indicates an event that will result in the constitution of a deferred tax liability, according to Technical Pronouncement CPC 32 - Taxes on Profit.

A) Recognition of a provision for contingencies.

B) Sale at a loss of a fixed asset whose accounting and tax useful lives are different.

C) Recognition of depreciation of an asset whose accounting useful life is longer than its tax useful life.

D) Recognition of a tax loss by an entity that has no prospects of future profits.

E) Recognition of a tax loss by an entity that has prospects of future profits.

Solution

1) A

2) C

3) Correct

4) D

5) D

6) B

7) A

8) C

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