Brazil: New criteria for taxpayers subject to “differentiated tax monitoring”

Brazil: “Differentiated tax monitoring” criteria

The Brazilian tax authority (RFB) has announced new criteria with respect to identifying taxpayers that are subject to Brazil’s “differentiated tax monitoring” procedure. This process has been in effect since 2005, and involves the analysis of tax and economic behaviors of “large taxpayers.” Beginning in 2016, there are new parameters for determining whether a legal entity is considered to be a “large taxpayer.”

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Background

RFB guidance—Portaria 641 (May 2015)—provides that the analysis of tax and economic information under the differentiated tax monitoring process is to be conducted in a systemic manner, and based on: (1) information from the collection of taxes administered by the RFB; (2) analysis of economic groups and sectors; and (3) management of the priority treatment related to tax liabilities.

Based on data disclosed by the RFB, tax payments made by “differentiated tax monitoring” taxpayers (i.e., major taxpayers) currently represent 63% of the total federal tax collection. 

Recent guidance

The RFB issued guidance—Portarias 1,754 and 1,755 (24 December 2015)—establishing new parameters for taxpayers, both individuals and legal entities, that will be subject to the “differentiated tax monitoring” process.

The new guidelines are based on a variety of factors or thresholds, such as the amounts of annual earnings reported in tax returns, the total value of goods declared, the amounts of wages paid, the amounts of rents received, and the value of rural property among other items. 

In general, a "large taxpayer" is defined as having:

  • Total annual gross revenues greater than R$ 165 million (approximately US $41.2 million)
  • Total amount of tax debts declared in local filings (DCTF) greater than R$ 17 million (approximately US $4.2 million)
  • Total amount of payroll greater than R$ 40 million (approximately US $10 million)
  • Total amount of social security charges greater than R$ 14 million (approximately US $3.5 million)

Specific new criteria are also provided for individual taxpayers, and these take into consideration the value of assets and properties, and the amounts of income or rental payments received.

 

Read a January 2016 report (English) [PDF 55 KB] and (Portuguese) [PDF 56 KB] prepared by the KPMG member firm in Brazil: Acompanhamento Diferenciado

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