How Does Taxation Work on Audiovisual Productions in Brazil?
Have you already submitted your income tax return? We are approaching the deadline for delivering the IR2023 and for this reason we decided to talk a little about taxation on audiovisual productions in Brazil.
How do you rate yourself in this type of subject? Expert or amateur? You manage everything when it comes to declaring your taxes, with all expenses, sponsorships, etc. from your production company or are you really lost at that time?
Whatever your proficiency level, our #MondayBlog will bring you some pretty interesting information! Prepared? Let's go!
How does taxation work on audiovisual productions in Brazil?
The taxation of audiovisual production in Brazil is regulated by several laws and tax rules, which establish the taxes that must be paid by companies and professionals in the audiovisual sector.
In general, the taxation of audiovisual production in Brazil is composed of several taxes and fees, such as the Corporate Income Tax (IRPJ) , Social Contribution on Net Profit (CSLL) , Social Integration Program (PIS) and Contribution for the Financing of Social Security (COFINS) , among others.
However, there are tax incentives for audiovisual production in Brazil, which can be used by companies and professionals in the sector. Among these incentives, we can highlight the Audiovisual Law (Law 8.685/1993) and the Rouanet Law (Law 8.313/1991), which offer tax incentives for companies and individuals that invest in cultural and audiovisual projects.
The Audiovisual Law, for example, allows companies to invest in audiovisual production projects and deduct the amount invested from their income tax payable. The Rouanet Law allows companies and individuals to deduct from the tax due the amount invested in cultural and audiovisual projects approved by the Ministry of Culture.
It is important to emphasize that the use of these tax incentives requires that the projects meet a series of requirements and criteria established by the laws in question, which may include the production of works of a cultural or artistic nature, the hiring of Brazilian professionals, among other aspects. .
How does the IRPJ work?
IRPJ (Corporate Income Tax) is calculated based on the company's net income, following a progressive rate table. There are three tax regimes: Simples Nacional, Presumed Profit and Real Profit.
This federal tax is levied on the income of companies, being calculated based on the net income obtained in a given period. It is regulated by Law nº 7.713/88 and Normative Instruction RFB nº 1.700/2017.
As we said, its calculation is based on the progressive rate table, which varies according to the type of activity of the company and its tax regime:
1- Simples Nacional: IRPJ is collected in a single bill, along with other taxes and contributions, and the rate varies according to the company's billing range.
2- Assumed Profit: the company must presume its calculation basis based on its gross revenue and apply a specific rate for each economic activity.
3- Taxable profit: the calculation base is the company's actual net profit, and the IRPJ rate is 15%, which may be increased by an additional 10% for profits above a certain amount.
It is worth remembering that companies must calculate and collect the IRPJ monthly, through the Simples Nacional Collection Document Generator Program (PGDAS-D), the Simples Nacional Collection Document Generator Program - Declaratory (PGDAS-D ) or the Declaration of Economic and Tax Information of the Legal Entity (DIPJ), according to the tax regime adopted.
How does CSLL work?
The CSLL (Social Contribution on Net Income) is a federal tax that is levied on the net income of companies, as well as the IRPJ. It was created by Law nº 7.689/1988 and is regulated by Normative Instruction RFB nº 1.700/2017.
The CSLL calculation base is the net income for the calculation period, which is adjusted by the additions and exclusions provided for by law. The purpose of these adjustments is to establish a more realistic calculation base, considering the particularities of the business and the company's financial operations.
The CSLL rate varies according to the company's activity and its tax regime. For companies that opt for Presumed Profit, the rate is 12%. For companies that opt for Real Profit, the rate is 9%, and financial institutions and similar must pay 15%.
The CSLL must be calculated and paid monthly, together with the IRPJ, through the Simples Nacional Collection Document Generator Program (PGDAS-D), the Simples Nacional Collection Document Generator Program - Declaratory (PGDAS-D) or of the Declaration of Economic and Tax Information of the Legal Entity (DIPJ), according to the tax regime adopted.
It is important to highlight that the CSLL is a social contribution and, therefore, the amounts collected are used to finance public policies in the areas of health, social assistance and social security.
How does PIS work?
The PIS (Social Integration Program) is a federal social contribution that aims to finance the payment of unemployment insurance, salary bonuses and other social integration programs. It was created by Complementary Law nº 7/1970 and is regulated by Decree nº 6.843/2009.
The contribution to PIS is due by companies that have employees registered on their staff and is calculated on the company's gross revenue. The PIS rate is 0.65% for companies taxed by Real Profit, Presumed or Arbitrated Profit, and 1.65% for companies taxed by Simples Nacional.
Companies must determine the amount owed to PIS monthly and collect it with COFINS (Contribution for the Financing of Social Security) in a single bill, through the Simples Nacional Document Generator Program (PGDAS-D) or the Declaration of Federal Tax Debts and Credits (DCTF).
Revenues from the PIS are used to finance public employment policies, professional training and the fight against poverty, among others. In addition, part of the PIS resources is allocated to the Worker Support Fund (FAT), which finances the payment of unemployment insurance and salary bonuses, for example.
How does COFINS work?
COFINS (Contribution for the Financing of Social Security) is a federal social contribution levied on the gross revenue of companies. It was created by Complementary Law nº 70/1991 and is regulated by Law nº 10.833/2003 and by Normative Instruction RFB nº 1.911/2019.
The basis for calculating COFINS is the company's gross revenue, which includes all revenue earned, including sales of products and services, minus taxes on sales. The COFINS rate varies according to the tax regime adopted by the company.
For companies that opt for Presumed Profit, the COFINS rate is 3.0%. For companies that opt for Real Profit, the rate is 7.6%. In the case of companies opting for Simples Nacional, COFINS is already included in the single collection form, together with other taxes and contributions, and varies according to the company's billing range.
COFINS must be calculated and collected monthly, added to the PIS (Social Integration Program), in a single form through the Simples Nacional Document Generator Program (PGDAS-D) or the Declaration of Federal Tax Debts and Credits (DCTF) .
The funds raised with COFINS are used to finance social security, which includes health, social security and social assistance. These resources are used to fund programs and actions in these areas, aiming at the well-being and social protection of citizens.
Can the Insurance Premium be included in the IR?
Insurance premiums are generally not deductible on income tax returns in Brazil, except in some specific cases.
In the case of life insurance, it is possible to deduct the premiums paid in the income tax return, provided that the insurance holder is the taxpayer and the beneficiary is the spouse or children. The maximum deduction limit is 12% of the total taxable income reported in the declaration.
In the case of other types of insurance, such as automobile, home, health, among others, the premiums paid are not deductible in the income tax return.
It is worth remembering that this information may change over time, so it is important to consult current tax legislation and/or an accounting professional for specific guidance on the subject.
In short, understanding the taxation of audiovisual productions in Brazil is essential for companies and professionals in the sector, as compliance with tax obligations and the proper use of incentives can significantly impact the financial health and success of audiovisual projects.
Did you like our theme for today?
See you on the next #MondayBlog !
Prospecto Seguros
Learn more:
Audiovisual Production
Errors and Omissions
Equipments
Drones
Life and Personal Accidents