Understanding the complexities of SPED obligations for taxes in Brazil
Article 4 minute read

Understanding the complexities of SPED obligations for taxes in Brazil

05 March 2019

Brazilian businesses have a very high tax burden with complicated obligations that are constantly changing. These obligations are part of a specialized digital system in Brazil called SPED.

Companies in Brazil must comply with SPED, Sistema Público de Escrituração Digital, which translates to the Public System of Digital Bookkeeping. This system was created to standardize and modernize the tax administration in Brazil and to replace paper copies of invoices and tax records. While the system was implemented 2008, it is constantly evolving with new obligations for tax payers and businesses that can be very complex.

SPED in Brazil

The SPED system is a technological universe that collects all financial, accountant, tax and labour information from Brazilian companies. SPED is composed of 12 modules, with 7 ancillary obligations and 5 different fiscal documents. Having all the information in one place makes it easier for tax authorities to notice any tax evasion or criminal activity by companies. 

The five fiscal documents of SPED are electronic invoices that all serve different purposes:

  • NF-e: a digital document that validates the operation and benefits of commercial transactions through the use of digital signatures from both the issuer and the tax administration
  • NFS-e:  electronic fiscal invoices for goods and services
  • CT-e: a digital document for the rendering of cargo transportation services requiring digital signatures as well
  • NFC-e: an e- invoice for consumers that are typically a natural person and not a company
  • MDF-e: an electronic tax manifest.

The seven ancillary obligations are: 

  • eSocial: a program to streamline HR and payroll in order to submit all the employee information on a monthly basis
  • ECD: the digital accounting bookkeeping documents which are delivered once a year before May 31st
  • ECF: this is the digital tax return that was created in 2014 which are delivered once a year before July 31st
  • EFD: Contrubuicoes: this is a monthly obligation of reporting digital tax documents to the federal tax authorizes (PIS and Cofins)
  • EFD-ICMS/IPI: this is a monthly obligation of reporting digital tax documents to the state tax authorizes (CISM and IPI)
  • EFD-ReInf: digital bookkeeping and monthly reporting of withholdings and information on Social Security contributions
  • e-Financeira: this a compliance obligation for banks.

The newest ancillary obligation for businesses in Brazil increases the scope of validation of withholding taxes. It is called Digital Tax Bookkeeping of the Withholdings and Other Tax Information (EFD-REINF) and businesses must submit the bookkeeping of earnings paid and the withholdings of Income Tax (IRRF) and Social Contributions (PIS, COFINS, CSLL, INSS and CPRB). The exceptions are those related to work and information on the gross revenue for the calculation of substituted social security contributions. All companies must report the withholding taxes monthly.

Artificial intelligence

The movement to a fully digital system has all companies using specific software to input invoices and tax information that will be filed to the authorities using their own systems (some are web systems).  With all the information in one place, artificial intelligence can help with predictions and making sure that there is full compliance.

Compliance

Preventative compliance is very important in Brazil since there are so many tax rules. Companies that are not prepared to give information to the tax authorities are more reactive and they will spend more money and time dealing with tax problems. The SPED universe is a very efficient tool to for businesses to use to guarantee competitiveness and credibility in the market since it is fully digital.  The SPED system also helps with the integration of the cities in Brazil using e-invoicing. Each city has its own website and software and the information can be transmitted accordingly to the appropriate authorities.

Penalties

As with all regulations and obligations, there are penalties if the information is not submitted to the authorities on time. The annual obligations have very high financial penalties if they are not adhered to which can damage your business. There can even be penalties if all taxes are paid throughout the year but the annual report is not filed.

How TMF Group can help

With new obligations like EFD-REINF and all of the other tax laws, it is incredibly important to stay compliant. TMF Brazil stays up to date with all of the changes and policies and can manage the taxes for your business. From preparing, filing and staying current on taxes to documenting all e-invoices, our local experts can handle all aspects of SPED for your company. TMF Brazil can also provide a full range of services to match your company’s requirements, either while entering the market or streamlining current operations in the country. Contact us to find out more about our services in Brazil.

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Written by

Stacey Palker

Content Writer - Americas
Stacey

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