Tax benefit for Civil Construction

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We know that some segments of our economy sometimes benefit from more lenient taxation, sometimes to encourage the development of that sector, sometimes to benefit the production chain, so that a given product becomes more accessible to the end consumer.

In this sense, specifically for the construction industry, there is a tax benefit that allows for the reduction of the IRPJ calculation base for companies in this segment that are included in the Presumed Profit tax regime.

The explanation is: the Presumed Profit taxation kazakhstan telegram data system encompasses several taxes, including Income Tax. In the Presumed Profit system, this tax is calculated on a basis corresponding to a percentage of revenue, and not on actual profit. The percentages that define the basis for calculating Corporate Income Tax (IRPJ) are set out in art. 15 of Law No. 9,249/95 .

By reading the article, it is possible to see that, for civil construction activities, the IRPJ calculation basis may be 8% (eight percent) or 32% (thirty-two percent) of gross revenue. The question that arises is: When should the 8% or 32% calculation basis be applied to civil construction works and services?



Applicability of the benefit
The applicability of this tax benefit to the construction industry depends on compliance with certain requirements and classification under certain concepts. First, it is necessary to establish the definitions of two distinct concepts: construction works and construction services. According to the Manual of Engineering Works and Services, Year 2014, of the General Consultancy of the Union:

It can be said that a work is any and all new material creation or incorporation of a new thing into an existing structure. Engineering Service (Civil Construction Service) is the activity designed to ensure the enjoyment of an existing utility or to provide the use of a new functionality in an existing thing/material asset.

Nothing new is created; on the contrary, the service consists of the repair, conservation, operation, repair, adaptation or maintenance of a specific material already built or manufactured. Or, the installation or assembly of an object in something already existing (AGU, 2014, p.11).

This differentiation is necessary, since the provision of services is, as a rule, taxed by the presumption coefficient of 32% (thirty-two percent) on gross revenue, as provided for in item “a”, paragraph III, § 1 of art. 15 of Law No. 9,249/1995:

Art. 15. 1º In the following activities, the percentage referred to in this article will be: III – thirty-two percent, for the activities of: provision of services in general, except hospital services; […]

As for the construction activity, the presumption coefficient is 8% (eight percent), in accordance with the provisions of item “d”, paragraph II, of art. 32 of Normative Instruction No. 1,700/2017:

Art. 32. II – 8% (eight percent) on gross revenue earned: d) in construction activities by contract using all materials essential for its execution, such materials being incorporated into the work; […]

In addition to this differentiation, it is important to note that the prerequisite for using the tax benefit for civil construction is the “total contract” modality, with the use of all materials incorporated into the work.

Therefore, for example, the situation in which the work is carried out by administration or by a labor-only contract is not discussed. In these cases, the percentage applicable in calculating the tax is 32% (thirty-two percent).

[yadaysrdone]

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