When New York first passed its law defining what constitutes a “vendor” subject to collecting sales tax in the 1980’s, the idea of online shopping sounded like science fiction. In retrospect, NY may have effectively enacted the first “economic nexus” law when they drafted their definition of “vendor” to include a person who regularly or […]
Brazil Launches EFD-REINF for Tax Withholdings
What is EFD-REINF?
A complement to eSocial (which covers tax withholdings on wages), EFD-REINF reports withholdings made to individuals and corporations resulting from the application of the income tax and social security taxes (CSLL, INSS COFINS, PIS/PASEP). It also applies to payments received by sport associations and revenues generated by sport events.
EFD-REINF replaces reporting obligations that the Brazilian taxpayers have to comply with under the EFD-Contribucoes.
Who must comply?
- Legal entities:
- That provide and contract outsourcing services in accordance with art. 31 of Law No. 8,212 of July 24, 1991
- Who are responsible for withholding the social security taxes PIS/Pasep, the Cofins and the CSLL
- Opting for payment of social security contribution on gross revenue (CPRB)
- Entities considered rural producers and agro-industries when subject to substitutive social security contribution on the gross revenue from the commercialization of rural production
- Sports associations that have professional soccer teams receiving revenues related to sponsorship, licensing of use of brands and symbols, marketing, advertising and broadcasting of sports shows
- Sponsors that provide resources to those sports association
- Entities marketing any sport event held in Brazil, involving at least one sport association that owns a professional soccer team
- Entities and individuals that have paid or credited income on which the federal income tax has been withheld by themselves or as representatives of third parties
How is the EFD-REINF structured?
There are three groups of reports, or “events,” that must be submitted to the tax administration:
- Table Events (Eventos de Tabela): Intended to optimize and validate the information that identifies the taxpayer and some administrative and legal processes that may affect them (if they exist).
- Non-Periodic Events (Eventos Não Periódicos): Information related to transactions that do not occur on a regular basis and therefore should only be reported when they occur.
- Periodic Reports (Eventos Periodicos): Events related to periodic information that should be reported on a regular basis by the taxpayer. These include:
- Withholdings for Social Security tax for services received
- Withholdings for Social Security tax for services provided
- Revenues received by sport associations
- Revenues Transferred by sport associations
- Social Security tax on gross receipts
- Withholding taxes (IR, CSLL, Cofins, PIS/PASEP)
When does it go into effect?
The EFD- REINF is being rolled out in three stages.
- May 1, 2018: Companies with revenues greater than 78 million Real annually
- November 1: Companies with revenue less than 78 million Real
- May 1, 2019: All public entities
What are the penalties for non-compliance?
Events that are incomplete, or reported with errors, will a face fines totaling 3% of the amount involved, with a minimum of $100 Real in the case of legal entities, and half of the above amounts when the taxpayer is an individual. Fines for late reports will range between from $500 Real to $1,500 Real per month or fraction of month.
To learn more about other changes impacting companies operating in Brazil and throughout Latin America, download the Definitive Guide to Error-Free Compliance in Latin America.
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