Brazil tax regime:
how to compare Actual, Presumed and Simples.

The decision starts with eligibility, not the tax rate

For Simples Nacional, revenue below the ceiling is not enough. Article 3(II) of Complementary Law 123/2006 classifies a small business by annual gross revenue up to BRL 4.8 million, but paragraph 4 retains statutory bars; item I, for example, reaches a legal entity “de cujo capital participe outra pessoa jurídica” — whose capital includes another legal entity. Activity, ownership and all other conditions must be tested before any calculation.

For Actual Profit and Presumed Profit, the period is also part of the formula. Articles 1 to 3 of Law 9,430/1996 distinguish quarterly assessment from the annual election with monthly estimated payments. The formal election and the horizon used in the projection cannot be changed in the middle of the comparison.

One input ledger feeds all three scenarios

Every row records value, unit, period, source, owner, cut-off date and validation status. An invalid input stops the affected scenario: a zero RBT12, an activity with no identified Simples schedule, an undocumented credit or a base with no period is not silently converted into zero.

ISS, the municipal service tax, remains a separate line. Complementary Law 116/2003, Article 7, takes the service price as the tax base, while Articles 8(II) and 8-A set, for other services, a 5% ceiling and a 2% floor subject to the statutory exceptions. The actual rate, taxing municipality and withholding depend on the service and local law; the model does not assume a universal percentage.

Reproducible formulas for Actual, Presumed and Simples

IRPJ, where applicable: IRPJ = 15% × base + 10% × max(base − BRL 20,000 × number of months, 0). The formula reproduces Article 3, caput and paragraph 1, of Law 9,249/1995: the surcharge applies to the base above the monthly threshold multiplied by the months in the assessment period.

Actual Profit: the tax-loss offset is capped at 30% of adjusted net profit under Article 15 of Law 9,065/1995; the negative CSLL base has its own control under Article 16. For non-cumulative PIS and Cofins, the model calculates debits and subtracts only statutory, documented credits: Articles 2 and 3 of Law 10,637/2002 provide the 1.65% PIS rate and credits, while Articles 2 and 3 of Law 10,833/2003 provide the 7.6% Cofins rate and credits. Different tax bases remain on different lines.

Presumed Profit: Article 15(1)(III)(a) and Article 20(I) of Law 9,249/1995 support the 32% service presumption within the scope described by the provisions and subject to their exceptions. In the ordinary cumulative hypothesis, PIS and Cofins use 0.65% and 3% under Article 8(I) of Law 9,715/1998 and Article 8 of Law 9,718/1998. The final model still separates ISS, withholdings and special treatments.

Simples Nacional: the effective-rate formula is in Article 18(1-A) of Complementary Law 123/2006. The schedule, band, revenue segregation and activity conditions are mandatory inputs. Comparing the revenue ceiling with an average rate does not replace this calculation.

CL 224 changes the excess band, not all presumed revenue

Article 4(4)(VII) of Complementary Law 224/2025 orders an “acréscimo de 10%” — a 10% increase — in presumption percentages. Paragraph 5 restricts the rule to total gross revenue above BRL 5 million in the calendar year and requires proportional application to each assessment period and to the revenue from each activity.

For quarterly assessment, questions 11 to 14 of the Federal Revenue Service Questions and Answers, version 5, operationalise a BRL 1.25 million limit. Question 11.1 explains that only revenue subject to presumption coefficients applied to gross revenue enters the threshold; amounts added in full to the tax bases, such as financial income and capital gains, do not. Question 12 applies the increase to IRPJ from the first quarter of 2026 and to CSLL from the second; question 13 sets a BRL 3.75 million annual limit specifically for CSLL in 2026. Question 14 allocates the limit among activities in proportion to their revenue.

Boundary case: a service company within the 32% presumption that earns exactly BRL 1.25 million in the first quarter has zero excess. Its IRPJ base is BRL 400,000; IRPJ is BRL 60,000 plus a BRL 34,000 surcharge because the quarterly surcharge threshold is BRL 60,000. The ordinary first-quarter 2026 CSLL base is BRL 400,000. This boundary proves that the CL 224 increase cannot be charged on the entire quarter.

The 2026 transition enters the cash bridge once

Article 346 of Complementary Law 214/2025 sets the 0.9% CBS rate for 2026 taxable events. Article 348(I) requires IBS and CBS amounts actually paid to be offset against PIS and Cofins due in the same period. If the amount exceeds the legacy liabilities, item II governs offset against other federal taxes or a refund; paragraph 1 waives collection when ancillary obligations are met, and paragraph 2 keeps full PIS and Cofins due in that case. Item III(c) excludes Simples taxpayers from the experimental rates.

The model therefore keeps four lines: IBS/CBS paid, PIS/Cofins before the offset, residual PIS/Cofins and recoverable excess. Accrual result and payment date also remain separate. This bridge avoids both overstating the 2026 cost and treating an unrealised credit as cash.

Invalid inputs, boundaries and sensitivities must change the answer

Hypothetical engine test only: a service company earns BRL 900,000 in the quarter and currently uses Actual Profit. Its adjusted IRPJ and CSLL bases are BRL 80,000, non-cumulative PIS/Cofins net of documented credits are BRL 25,000, and compliance and transition cost BRL 20,000. IRPJ is BRL 14,000, ordinary CSLL is BRL 7,200, and the Actual Profit decision cost totals BRL 66,200.

Applying the same facts to the service Presumed Profit regime, with no CL 224 excess, produces a BRL 288,000 base. IRPJ totals BRL 66,000, CSLL BRL 25,920, cumulative PIS/Cofins BRL 32,850 and hypothetical operating cost BRL 10,000: BRL 134,770 in the defined scope. If a legal entity holds an equity interest, Simples is ineligible under Article 3(4)(I) of CL 123. The test output is to stay under Actual Profit, not to force a switch.

The example is not a substitute for case-specific advice and excludes components held outside the test, such as ISS. Its purpose is verifiable: an engine that always recommends switching, accepts incomplete inputs or never changes its answer when a material variable changes is defective.

The engagement ends with a decision, owners and a secure channel

1. 1. Scope and cut-off date. TaxUp and the company define entities, activities, period, alternatives, exclusions and decision-makers. Initial triage is not a final recommendation.
2. 2. Controlled data room. The company names owners for ledgers, trial balances, ECF, EFD-Contribuições, PGDAS-D, payroll, contracts and payment evidence. Credentials, tax files and personal data should not be sent through the open booking field; a secure channel is agreed after the meeting.
3. 3. Model and review. TaxUp documents formulas, sources, assumptions, gaps and reconciliations. The company validates data provenance and explains differences; material legal issues receive their own review.
4. 4. Board Pack. Delivery may include an eligibility matrix, tax-by-tax bridge, monthly cash curve, sensitivities, risks, implementation cost, recommendation and the resolution requested from management or the board.
5. 5. Implementation and monitoring. If the decision is to switch, a separate plan defines the owner, evidence, milestone and control. If it is to stay, the event that reopens the analysis is recorded.

The secure channel, access profiles, document retention and file destination are defined in scope. This page does not promise automatic deletion or accept sensitive documentation through a public form.

For the wider framework, see Tax Planning, the CL 224 Presumed Profit calculator and the analysis of the Simples transition. The initial meeting defines the case, data and decision-makers before any tax file is exchanged.