Meaning of Actual Profit (What It Is, Concept and Definition)

Actual profit is a way of calculation of the tax rate for payment of Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL).

The actual profit value is the general regime used to calculate the value of corporate taxation, that is, if the company does not choose another way of calculating the tax, the tax regime adopted will be the profit real. This calculation system is considered the most complex of those existing in the tax system.

How does real profit work?

Actual profit is calculated based on the company's accounting profit. This value is obtained after accounting for the company code over a period. Tax adjustments that are provided for by law are added to the profit.

Many types of companies are required to adopt this tax regime, as it is the general tax regime. The law provides which are:

  • banks, credit companies and cooperatives, finance companies, real estate credit managers, foreign exchange brokers, insurance companies and the like,
  • companies that are linked to agribusiness,
  • companies that receive some type of tax exemption or benefit,
  • companies of factoring (granting of short-term credit for goods or services, for companies in situations of financial difficulty),
  • companies that make a profit or receive capital from abroad,
  • Specific Purpose Societies that use the Simple Nacional model.

How to calculate actual profit?

The calculation of actual profit is based on the company's net profit figures.

The first step in real profit accounting is determine the total billing amount the company in the period, that is, calculate the amount received for the activities of the company in the sale of its products or services. Next, expenses and expenses incurred by the company for its operation, such as maintenance and payment of employees, must be deducted from this amount.

The final value obtained from this calculation corresponds to the company's actual profit. Thus, the company's IRPJ will be calculated based on this amount.

What is the period for calculating the actual profit?

The calculation period can be done in two ways: once a year (annually) or every three-month period (quarterly).

Calculation of IRPJ

The calculation of Income Tax, on the other hand, must be done every three months, with dates that are established by law, with a rate of 15% on actual profit.

The dates are as follows: March 1st, June 30th, September 30th and December 31st.

CSLL calculation

CSLL must be accounted for every three-month period, based on the actual profit for the corresponding period. The contribution rate to be paid must be calculated on the taxable income for the period.

The rate, as a rule, is 9% on the actual profit value. For financial, credit and insurance companies, the rate applied is 15%.

What is the advantage of real profit?

The first advantage that can be pointed out is the fact that the calculation base value is based on the real profit earned by the company, based on the data that is obtained after accounting for profits and expenses. In this way, in addition to corresponding to the reality of profit, taxation is fairer.

Another advantage of real profit is the possibility of do not pay the IRPJ in some period, when there is a tax loss, which occurs when the company's profit is negative, that is, when there is no profit. When this loss occurs, there is the possibility of not paying the company's Income Tax, since the calculation is made on the actual profit.

In this situation, there is still another advantage, since the law allows that, in situations of tax loss, the company can offset the amount of the loss in the next profit calculations.

The company that opts for real profit may also be entitled to some tax and tax benefits, such as the right to deduct from Income Tax amounts that are used to finance cultural projects, health programs and donations, among others.

Payment of Social Interaction Program (PIS) and Contribution to Social Security Financing (COFINS)

Both PIS and COFINS are types of social contributions. PIS finances unemployment insurance and allowances paid to workers, while COFINS is used to pay Social Security benefits.

In the calculation of actual profit, the PIS payment is made in a non-cumulative form. In this case, the company is entitled to debit the PIS amount from the accounted billing amount. In this modality the PIS rate is 1,65%.

COFINS is also calculated on a non-cumulative basis. As with the PIS, the company can deduct the amount of the contribution from the calculated billing. For COFINS the rate is 7,60%.

Difference between actual profit and assumed profit

Actual profit and presumed profit are two different forms of calculation for paying IRPJ. The main difference between the calculation methods is the calculation basis used.

As stated above, the actual profit uses the value of the net profit earned by the company. The presumed profit, on the other hand, is based on a value that is previously established and which does not correspond to the exact reality of the company's profit in the period.

See also the meaning of Profit and Presumed profit.

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