CONTENTS
01. OVERVIEW
In Brazil, the payer is responsible for withholding and collecting the IRRF (Article 717 of RIR). Once the charge is transferred to the payer in Brazil, the calculation base must be adjusted (Gross Up).
(Article 725 of RIR): The taxation of export operations must occur only on services from abroad, provided by a natural person or a legal entity residing or domiciled abroad, rendered in Brazil or abroad, the result of which is verified in Brazil; that is, if the result is verified abroad, no Brazilian taxes are levied on the export. (Statute No. 10,865/2013). The tax withheld is collected on the date of the taxable event (foreign exchange contract), via DARF. Be mindful that it has a minimum collection value
There are two hypotheses for IRRF processing in import operations, as follows: The charge is borne by the service provider, in which case the withholding is processed similarly to domestic market operations;
The charge is borne by the party paying for the service it has contracted, in which case the adjustment must occur. This is the most common rule in domestic trade, considering that service providers cling to net price;
When importing services, you can calculate by adding the tax value to your Calculation Base, a practice known as calculation inside or GROSS UP.
When you import the service, the system lets you calculate the IRRF (Withheld Income Tax) with an adjusted calculation base, adding the IRRF value to its own calculation base. Besides the IRRF, you can perform this calculation for Import COFINS and PIS, CIDE, ISS and on the service value, depending on your settings.
Besides executing the Gross UP, you must not deduct the IRRF value from the main bill in accounts payable.
02. EXAMPLE
To configure the calculation, access the suppliers register and change field A2_GROSSIR Income Tax Calc. Base as desired. In this field, enter whether to perform Gross UP in the IRRF Calculation Base when calculating the IRRF; that is, whether to add the IRRF value to its own Calculation Base.
The available options are:
0 - Without GROSS UP: Without GROSS UP;
1 - Serv. Imp. IRRF: GROSS UP in Service Import in IRRF calculation base and Import COFINS and PIS;
2 - Serv. Imp. IRRF + CIDE: GROSS UP in Service Import in calculation base of IRRF, Import COFINS and PIS and CIDE;
3 - Serv. Imp. IRRF + Service Val.: GROSS UP in Service Import in calculation base of IRRF, Import COFINS and PIS, and also in the Service value. This option changes the invoice value and the trade note value, because the IRRF is built into the value of the service received.
See below some practical examples of each calculation type:
0 - Without GROSS UP
Service Value: BRL 10,000.00
Income Tax Rate: 15%
Income Tax Calculation Base: BRL 10,000.00
IR value: BRL 1,500.00
1 - Serv. Imp. IRRF
Service Value: BRL 10,000.00
Income Tax Rate: 15%
Adjusted Calculation Base
To arrive at the Adjusted Base value, perform the calculation below:
1-0.15 in which 0.15 is the IRRF rate
1 – 0.15 = 0.85
BRL 10,000.00 + 0.85 = BRL 11,764.71
Adjusted base: BRL 11,764.71
IRRF Value
BRL 11,764.71 * 15% = BRL 1,764.71
Import COFINS and PIS Calculation Base
To arrive at the base value of PIS and COFINS, use the formulas below:
GROSSUP: Z = (1+f) / (1 - c - d)
Adjusted IRRF base: BRL 11,764.71
ISS tax rate: 5%
PIS tax rate: 1.65%
COFINS tax rate: 7.6%
GROSS UP Calculation
Z = (1+0,05) / (1-0,0165-0,076) = 1,157025
Base of PIS and COFINS
BRL 11764.71 * 1.157025 = BRL 13,612.06
PIS
BRL 13,612.06 * 1.65% = BRL 224.60
COFINS
BRL 13,612.06 * 7.6% = BRL 1,034.52
2 - Serv. Imp. IRRF + CIDE
In this option, the system calculates the GROSS UP of IRRF and Import Cofins and PIS as in the previous options. The only difference is the adjustment to the CIDE Calculation Base.
To do this, use the formula below:
Adjusted base: BRL 11,764.71
CIDE Base: BRL 11,764.71 (CIDE receives the Income Tax value)
CIDE Rate: 10%
CIDE Value: BRL 11,764.71 * 10% = BRL 1,176.47
3 - Serv. Imp. IRRF + Service Val.
In this option, the system calculates the GROSS UP of IRRF, Import COFINS and PIS as in the previous options; however, it adjusts the service value, changing the invoice value. CIDE also has its base formed differently.
The calculation base of ISS and CIDE receive their value from ISS itself and from the Income Tax GROSS UP:
To do this, use the formula below:
Service Value: 10,000.00
Adjusted base (Income Tax Gross Up): 10,000.00 * 0.85 = 11764.71
ISS Base: Adjusted base / (1-0.05) in which 0.05 is the ISS rate
ISS Base: 11,764.71 / 0.95 = 12,383.91
ISS value: 12,383.91 * 0.05 = 619.20
CIDE Base: Service Value + Income Tax Value + ISS Value
CIDE Base: 10,000.00 + 1,764.71 + 619.20 = 12,383.91
CIDE Value: 12,383.91 * 0.1 =1,238.39
Document Value: BRL 11,764.71
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