*By Manoel Antonio dos Santos
There are two basic ways for companies to determine the “profit" for the purposes of paying Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL): (1) Real profit, which corresponds to the difference between total taxable income any less deductible costs and expenses, and (2) Presumed profit, which results from the application of a percentage on the gross revenue earned.
According to Law 9,249, in relation to the IRPJ, the basic percentages for calculating the presumed profit are 1.6% for fuel resale; 8% for hospital services as well as sale of goods; 16% for transport services and 32% provision of general services and intermediation. With regard to CSLL, the percentages for calculating the presumed profit are 32% in the provision of services in general and intermediation and 12% for other activities.
Over the past two decades, the RFB had consolidated its understanding, having published dozens of regulations on the subject, from Consultation Solution DISIT/SRRF07 Nº 99, of 04/15/2003, to SC DISIT-SRRF/06 Nº 6022 , of 07/21/2021, establishing the following understanding:
- “The sale (development and publishing) of ready-to-use software (standard or off-the-shelf) is classified as sale of merchandise, and the percentage for determining the IRPJ calculation base is from 8% on gross revenue.
- The sale (development) of on-demand software is classified as provision of service, and the percentage for determining the IRPJ calculation base is from 32% on gross revenue.
- Making mere adjustments to existing software does not change the character of the sale of goods, which, consequently, determines the use of the percentage of presumption, within the scope of presumed profit, of 8% for the purpose of calculating the IRPJ calculation base."
However, on February 7, 2023, after almost twenty years guiding taxpayers to calculate the profit by the percentage of 8%, the Federal Revenue Service of Brazil published COSIT Consultation Solution No. increase in the tax burden for companies that sell computer programs (software) sayings “standardized” – behold, the norm brought a new interpretation to the wording of art. 15, § 1, III, item “a” of Law No. 9,249/95, defining the percentage of 32% on gross revenue for calculating the presumed profit in relation to revenues with “ready-to-use software (standard or off-the-shelf), proclaiming that:
To the activities licensing or assignment of right to use computer programs standardized or customized to a small extent, the percentage for determining the IRPJ calculation base, what the caput of art. 15 of Law No. 9,249, of 1995, is from 32%, provided for the provision of services, in item “a” of item III of that same article.”
The practical effect of the RFB's decision is that companies that adopted such a system will now have to assume profit by a percentage four times higher: 32% and no longer 8%! Applying the new interpretation of the RFB, the disbursement with IRPJ and CSLL will represent between 7.68% and 10.88% of revenue – in the previous interpretation, the sum totaled between 2.28% and 3.08% of revenue. O additional charge will be between 5.40% and 7.8% on companies' revenues.
For more than a decade, ABES – Associação Brasileira das Empresas de Software has been warning its associates about the risks of this interpretative change happening, at the same time that it guided companies to adopt caution in their accounting and tax bookkeeping, in order to prevent the feared new interpretation would bring impacts in relation to past operations. In this regard, for example, consult the “ABES GUIDELINES – MAY /2011” – TAXES DUE ON THE SALE OF SOFTWARE.
With regard to the "past effect", coherently - it should be recognized - the Consultation Solution No. 36 on comment expressly ratified that the commands contained in this rule will not apply retroactively, behold, item 36 provides as follows:
“Pursuant to art. 26 of Normative Instruction RFB No. 2.058, of 2021, and item I of art. 1 of the RFB Interpretative Declaratory Act No. 4, of November 25, 2022, in the event of a change in understanding express in query solution, the new orientation, if unfavorable to the consultant, will only apply to triggering events occurring after the date of its publication in the Official Press or after the date of awareness of the solution by the consultant🇧🇷
It follows, therefore, that in relation to the calculation periods ended up to February 15, 2023, the companies that adopted this system will continue to determine the profit assumption, for the purposes of calculating IRPJ and CSLL, at the rate of 8% on revenues, without risk in relation to previous calculation periods. This means that companies that applied the presumption of profit to 8% will not be required to collect differences in relation to the past. The new rule will only apply from now on.
According to art. 33 and art. 39, § 2nd IN RFB No. 2.058, of 12/9/2021, the Cosit Consultation Solution and the Divergence Solution, from the date of their publication, have binding effect within the scope of the RFB, that is, they support the taxable person to apply them, as long as it fits the hypothesis covered by them, regardless of whether he was the one who formulated the Consultation.
Another point for reflection lies in the fact that governments cannot charge taxes in the same financial year in which the law that instituted or increased them was published, nor before ninety days have elapsed from the date of publication of the norm. These are the so-called principles of precedence (ninth and annuality) that are set out in article 150, item III, of the CF. There are taxes that are subject to ninety, others that are subject to annuality and others that are subject to both (ninth and annuality). It is undeniable that SC nº 36 represents an increase in the IRPJ (subject only to annuality) and CSLL (subject only to ninety years).
Thus, although Consultation Solution No. 36 is not a "law" in the strict sense - as it is configured as a rule infralegal -, She will be “law” in the broad sense, which unquestionably proved to be a norm capable of generating rights and obligations, that is, a positive source of law. In the specific case of SC nº 36, it must respect the principles of anteriority and annuality. And, having been published on 02/15/2023, it will respect the ninety in relation to the CSLL calculation, taking effect after May 15, 2023; as for the calculation of the IRPJ, the effects will only apply from next year.
It should be noted that nobody is against the STF, against COSIT, against the RFB. The unquestionable fact is that the segment that is dedicated to economic exploitation “off-the-shelf software”, works with very low margins, typically for goods, and the calculation of profits by the percentage of 8% was well within reality, while the application of the percentage of 32% will make the survival of a large number of companies in the sector unfeasible.
In view of the harmful effects that this change in the application of the rule represents, and that the change will hit harder small and medium-sized companies, ABES and fellow entities in the ICT sector will seek with the Federal Executive, and through its action before the legislature, the implementation of legal measures that can mitigate the damages that companies will suffer. In this sense, for example, sectoral entities representing the sector will claim the equivalence of their activities to hospital services, which continue to presume their profits by the percentage of 8% on revenues.
*Manoel Antônio dos Santos is Legal Director of the Brazilian Association of Software Companies (ABES), and a specialist in business law, with a focus on taxes, contracts and information technology.
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