The ISS (Tax on Services) is a tax levied on the provision of services that companies and self-employed professionals perform. Governed by Complementary Law 116/2003, is collected by the municipalities and the Federal District. It came to replace the ISSQN (Tax on Services of Any Nature).
Meet the UK residents tax system it is one of the most important requirements for those who have a business, whatever their size. And also for those who take care of the financial management of a company.
That’s why we’ve prepared this article to talk exclusively about service taxes. Do you know what they are and how to calculate them?
Unfortunately, the high UK residents tax burden has a significant impact on the development and growth of many enterprises. Fees take up a large part of the company’s capital, limiting cash flow, positive results and the ability to make new investments.
But, not knowing the taxes and tax obligations, or simply ignoring them, can cause even more financial losses to the company.
And that’s not what you want, is it?
So, before I continue talking about the service taxes, I’ll tell you a secret: knowing the tax regime well can help your company to save on paying taxes.
How is this possible? To do the correct tax framework is one of the possibilities!
That is why knowledge of taxes is so important. But, in case you still don’t know all the service taxes do not worry. We will detail in this article all taxes that you who perform services must pay.
What is ISS and who should pay
O ISS (Service Tax), substitute for ISSQN (Tax on Services of Any Nature) is a tax on the provision of services. It is collected by the municipalities and the Federal District, governed by the Complementary Law 116/2003.
Therefore, almost all activities that involve the provision of services generate this tax, charged on the invoices issued by the provider. This requirement applies to small, medium and large companies, as well as self-employed professionals and individual micro entrepreneurs (MEI).
However, not all services are taxed by the ISS. Intercity, interstate and telecommunications services, for example, are subject to the ICMS (Circulation of Goods and Services) and not the ISS. There is also no impact of this tax on services provided abroad with effects only outside the country.
The activities that must collect the ISS are listed on the website of the Plateau with the display of the Complementary Law.
As required by law, ISS rates vary between 2% and 5% as defined by the municipality in which the service is performed. There is no standard that determines how much each municipality should charge within this percentage.
In addition, the tax system in which the company or the self-employed professional is included also influences this value.
Optors for Simples Nacional have the ISS rate calculated according to the company’s billing, increasing according to revenue. In Real Profit, Presumed Profit or Real Profit, the rate is defined by the type of service, which is tabulated in each municipality.
The collection of service taxes it is intended for the municipality for which the service was provided, even if the provider is from another city.
Other service taxes
In addition to the ISS, companies can also be taxed by other taxes that we will see below:
O EHIC it is a mandatory tax for companies who hire employees or another organization that acts as a service provider.
The purpose of the payment is to provide benefits to workers, such as retirement, maternity leave, sickness benefit, death pension, 13th salary and professional rehabilitation.
The calculation of the rates varies according to the salary amount and the type of worker (employee, domestic employee, individual taxpayer, optional or special).
As previously mentioned, some services are taxed by the ICMS and not by the ISS. The services that fall under this tax service taxes are: electricity distribution, road cargo transportation and telecommunications services.
The national tax, however, each federative unit has its specific rules regarding the calculation of the rates and payment of the ICMS.
O Corporate Income Tax (IRPJ) it is mandatory for companies of any size and individual micro entrepreneurs. Paid quarterly, the IRPJ is calculated according to the taxation model that the company has, see some below:
- Simples Nacional: the tax is already discounted in the tax guide itself and varies according to the company’s billing;
- Presumed Profit: the rate for the calculation of the IRPJ is 15% over the amount of the presumed profit. This profit is based on a government table that estimates the percentage of profit according to the segment in which it operates;
- Real Profit: 15% is levied on the company’s profit.
THE Social Contribution on Net Income (CSLL) it is considered one of the most representative taxes, as it covers all legal entities in the country. That is, in addition to the IRPJ, all legal entities that opt for Presumed, Actual or Arbitrated Profit must also collect the CSLL.
The calculation applied to this tax over services follows the same calculation and payment rules established for the IRPJ.
The CSLL is intended to support the financing of social security. That is, investments in public services such as: unemployment benefits, retirement, health rights, etc.
PIS and COFINS
COFINS (Contribution for the Financing of Social Security) is of a federal nature, calculated on the value of the company’s revenue. It is another of service taxes that collaborates with the financing of social security.
The calculation is based on the tax regime:
- Presumed Profit: fixed rate of 3%;
- Real Profit: fixed rate of 7.6%.
The PIS (Social Integration Program), in turn, together with the PASEP (Program for the Formation of Civil Servants ‘Equity) integrates the financing of unemployment insurance and workers’ wage bonus.
The calculation basis also takes into account the tax regime:
- Presumed Profit: 0.65% rate;
- Real Profit: 1.65% rate.
The Withholding Income Tax (IRRF) is an advance payment of income tax, charged by the IRS to companies. It is a mandatory contribution calculated on the average annual income, of the company or individual.
For workers hired under the CLT regime, the table ranges from 7.5% to 27.5%.
Registered workers, who work under the rules of the CLT, the rates vary from 7.5% to 27.5%, according to the salary received by the employee.
The lack of collection of service taxes leaves the company in an irregular situation with the IRS. As a consequence, she will receive, at some point, a notice and the collection of taxes due, plus fines and interest, which are very high. Therefore, it is better to avoid headaches and extra expenses with mandatory taxes.
So, he had some doubts about the service taxes? What do you think of the UK’s high tax burden? Reply here in the comments and share your opinion with us!
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