Story: Beatriz & Co. Keeps Growing
Three years later, Beatriz & Co. Consulting is no longer a small firm. She now has a team of ten consultants, many clients across Brazil, and even some foreign partners. Her annual revenue is close to R$6 million.
One morning, Beatriz meets with Mr. Silva to discuss the future.
“Congratulations, Beatriz,” he says. “You are no longer a micro or small business. This means new challenges, especially in taxation.”
Beatriz takes a deep breath. “Tell me what I need to know.”
Moving Between Tax Regimes
Mr. Silva explains:
Since her revenue is now above R$4.8 million, she can no longer use Simples Nacional.
She must switch to Lucro Presumido. This regime is more complex, with separate calculations for IRPJ, CSLL, PIS, and COFINS.
Beatriz asks: “And what happens if we keep growing?”
Mr. Silva answers:
If her company ever reaches R$78 million per year, she will move to Lucro Real.
“In Lucro Real, taxes are based on your actual profit. It’s the most demanding regime, but also the only option for very large businesses.”
Beatriz writes in her notebook: “Growth = more opportunity + more responsibility.”
Compliance and Audits
Mr. Silva continues:
“As your company grows, the government pays more attention. You must keep all your accounts, invoices, and tax reports in perfect order. This is called compliance.”
Beatriz nods. “What happens if I make a mistake?”
“Penalties,” Mr. Silva says seriously. “Fines, interest, even legal problems. That’s why many big companies hire tax specialists and auditors.”
The International Dimension
Beatriz recently signed a contract with a client from Portugal. Payments now arrive from abroad.
Mr. Silva explains that cross-border business means new rules:
Withholding Taxes: Part of the payment from abroad may be withheld for taxes.
Double Taxation Treaties: Brazil has agreements with some countries to avoid taxing the same income twice.
But there’s more. Mr. Silva shares news from the OECD (Organization for Economic Cooperation and Development):
“Many countries, including Brazil, are discussing a minimum effective tax rate for large multinational groups. The idea is that even if companies move profits abroad, they must pay at least a certain percentage in taxes.”
Beatriz is fascinated. “So even if my company opens a branch in another country, Brazil will still make sure I pay fair taxes?”
“Exactly,” Mr. Silva replies.
Authentic Element: News Article Extract
Beatriz reads a short news piece:
“From 2024, Brazil will adopt new international tax rules in line with the OECD. Multinational enterprises must respect a minimum effective tax rate of 15%. The measure aims to prevent tax avoidance and ensure fair competition.”
Beatriz underlines “minimum effective tax rate” and smiles.
“Mr. Silva, maybe one day this will apply to me!”
“Who knows, Beatriz,” he laughs. “You are growing fast.”
Glossary (Plain English → Portuguese + Acronym)
Compliance – Conformidade (following all legal and tax rules)
Audit – Auditoria (official inspection of accounts)
Withholding Tax – Imposto Retido na Fonte
Double Taxation Treaty – Tratado para Evitar Bitributação
OECD – Organização para a Cooperação e Desenvolvimento Econômico
Minimum Effective Tax Rate – Alíquota Efetiva Mínima
Discussion
Imagine Beatriz & Co. opens a branch in Europe. How might the minimum effective tax rate affect her company?
