30/03/2005 – The Provisions of the Law No.11.051 and the Reduction of “PIS” and “COFINS”; to the Software's Companies
The Provisional Measure No. 219, dated September 30th, 2004, published in the Official Gazette (“DOU”;), in October 1st, 2004 (“MP 219”;) and which was approved and converted into Law No. 11.051, dated December 29th, 2004 (“Law 11.051), published at DOU, in December 30th, 2004 , regulated the discount of credits verified in the calculation of the amounts due as Social Contribution on Net Profits (“CSLL”;), non-cumulative Social Security Contribution (“PIS/PASEP”;) and non-cumulative Contribution for Financing the Social Security (“COFINS”;).
The Law 11.051 brought up multiple changes to the previous system of calculation of the above referred contributions, among which changes we identify as the most relevant:
(1) the discount of credits in the calculation of CSLL, PIS/PASEP and COFINS;
(2) the certificate issued by the Federal Income Office (“SRF”;) and by the Office of Attorney-General of the National Treasury (“PGFN”;); and
(3) the Tax Reduction of PIS and COFINS for the Software Companies.
1. Right of Credits in the Verification of CSLL, PIS/PASEP and COFINS
The credit mentioned in the text of Law 11.051 is applicable in the calculation of CSLL for the legal entities taxed by the system of pretax profits over the depreciation on the book value of machines, devices, instruments and new equipment, defined as fixed assets and used in industrial processes, listed by the Federal Executive Branch, which assets were acquired within the period comprised between October 1st, 2004 and December 31st, 2005. The percentage of discount of credits will be at the rate of 25% (twenty-five per cent) over the depreciation on the book value of the assets, and limited to the amount due as CSLL, calculated according to the annual or quarterly tax regime, observing that the exceeding installments may not give the right of refund, compensation, reimbursement or future use.
The legal entity can use the credit calculated from the month in which the asset begins to operate until the 4th (forth) subsequent year, in which the total amount of the benefit shall be added the amounts due as CSLL in the following months. It is important to note that CSLL will be charged even if in the calculation period, the tax basis were negative. With regards to non-cumulative PIS and COFINS, the legal entity may use the possibility of discount of the credits for a period of 2 (two) years, of the credit of these contributions hereafter mentioned, in the event of acquisition of assets listed by the Federal Executive Branch.
The calculation of credits of PIS and COFINS is made by of the tax rates of, respectively, 1,65% and 7,6% over the correspondent value of 1/24 from the acquisition cost of the asset.
2. Clearance
Certificate issued by the Federal Revenue Service with respect to federal taxes and contributions and Clearance Certificate issued by the Federal Treasury For a period of 1 (one) year as from the date of publication of Law 11.051, the Federal Revenue Service (“SRF”;) and the Office of Attorney-General of the National Treasury (“PGFN”;) are authorized to issue, respectively, the Clearance Certificate issued by the Federal Revenue Service with respect to federal taxes and contributions and Clearance Certificate issued by the Federal Treasury, in cases in which the taxpayer challenges any tax debits indicated by the SRF or PGFN and pending of decision for more than 30 (thirty) days. It is important to mention that the SRF and PGFN have to issue the necessary acts in compliance with the Law 11.051 provisions.
3. Tax Reduction of PIS and COFINS for the Software Companies
One of the biggest accomplishments of the Informatics’ Business (“Business”;) was the inclusion, by the House of Representative (Câmara dos Deputados), of section XXV in article 10 of Law No. 10.833, dated December 29th, 2003, that established the exclusion of income earned by the companies that render technology services from the system which provides for the non-cumulativeness and application of the tax rates of 1,65%/PIS and 7,6%/COFINS, which means that the Business will be charged by the tax rates of 0,65%/PIS and 3%/COFINS and the cumulative system.
The activities which were beneficiated by these provisions are: “software development and the license or assignment of use rights, as well as the analysis, programming, installation, configuration, consulting, consultancy, technical support and maintenance or update of software, understood still as software the electronic pages”; . It is important to mention that this benefit is not applicable for the commercialization, license and assignment of use rights of foreign software. Should you need any further clarification on the above, please do not hesitate to contact us.
Source: Almeida Advogados