Story: Beatriz Takes the First Step
Beatriz is excited. After years of working for others, she is opening her own company: Beatriz & Co. Consulting. Her first client is already waiting.
But before she can send her first invoice, her accountant, Mr. Silva, tells her something important:
“In Brazil, Beatriz, every business must choose a federal tax regime. This choice will decide how much tax you pay, how you report it, and how much paperwork you’ll face.”
Beatriz looks nervous. “I don’t understand. What are my options?”
Mr. Silva explains:
Simples Nacional: the Simplified National Regime. “This is designed for small businesses. You pay one tax each month, and it already includes many different federal, state, and municipal taxes. Less bureaucracy, lower rates, but only for companies with revenue up to R$4.8 million per year.”
Lucro Presumido: the Presumed Profit Regime. “Here, the government assumes your profit is a fixed percentage of your revenue, depending on your industry. You pay taxes based on that assumption, even if your real profit is different.”
Lucro Real: the Actual Profit Regime. “Large companies must use this one. You calculate taxes based on your actual profit. It can be fairer, but it requires detailed accounting. It’s mandatory if revenue is above R$78 million per year.”
Beatriz takes notes.
Understanding Federal Taxes
Mr. Silva then tells her that under any regime, she will face the main federal taxes:
Corporate Income Tax (IRPJ – Imposto de Renda da Pessoa Jurídica)
Social Contribution on Net Profit (CSLL – Contribuição Social sobre o Lucro Líquido)
Social Integration Program Contribution (PIS – Programa de Integração Social)
Contribution for Social Security Financing (COFINS – Contribuição para o Financiamento da Seguridade Social)
“These sound complicated,” Beatriz says.
“Yes,” Mr. Silva smiles, “but if you start with Simples Nacional, many of these are grouped together in one single monthly payment.”
Authentic Element: Beatriz Reads a Receita Federal Guide
Mr. Silva sends her a short text from the Receita Federal (Brazil’s Federal Revenue Service). Beatriz reads carefully:
“Simples Nacional is a special unified tax regime for micro and small enterprises. It simplifies the collection of federal, state, and municipal taxes. Eligibility: annual revenue up to R$4.8 million. Companies in certain industries, such as financial services, are excluded.”
Beatriz underlines two words: “unified” and “excluded.” She asks Mr. Silva:
“Does that mean some companies cannot use Simples Nacional?”
“Exactly,” he replies. “For example, banks or investment companies. But consulting is included, so you’re safe.”
Decision Time
Beatriz looks at her first-year business plan. She expects annual revenue of only R$400,000.
“So, which regime should I choose?” she asks.
Mr. Silva answers:
“With your revenue, Simples Nacional is the best. Easy to manage, less stress, and you can focus on growing your company.”
“If you grow beyond the limit, we’ll switch to Lucro Presumido. And if one day Beatriz & Co. becomes a multinational with more than R$78 million in revenue—then we’ll move to Lucro Real.”
Beatriz laughs. “That sounds like a long way from now!”
Glossary (Plain English → Portuguese + Acronym)
Corporate Income Tax – Imposto de Renda da Pessoa Jurídica (IRPJ)
Social Contribution on Net Profit – Contribuição Social sobre o Lucro Líquido (CSLL)
Social Integration Program Contribution – Programa de Integração Social (PIS)
Contribution for Social Security Financing – Contribuição para o Financiamento da Seguridade Social (COFINS)
Simples Nacional – Simplified National Regime
Lucro Presumido – Presumed Profit Regime
Lucro Real – Actual Profit Regime
Discussion
- If Beatriz’s company grows very fast, what problems might she face when moving to another tax regime?
