Reintroduction of the CSLL 20% rate for financial institutions and development agencies

On April 28, 2020, the Brazilian Federal Revenue (“RFB”) published Normative Ruling No. 1,942/2020, modifying and including certain provisions to Normative Ruling No. 1,700/2017, in order to provide some guidelines for the application and calculation of the Social Contribution on Net Profit (“CSLL”), based on specific rates, by financial institutions and development agencies, considering the amendments provided for in Constitutional Amendment No. 103/2019. 

Normative Ruling No. 1,942 rectified Article 30, item IV, of Normative Ruling No. 1,700/2017 to confirm the applicable CSLL rates for these institutions, as follows:

(i)    15%, in the period from January 1, 2019 to February 29, 2020; and
(ii)    20%, applicable from March 1, 2020.

It is worth mentioning that Article 1 of Law No. 13,169/2015 provided for a 20% CSLL rate for these institutions in the period from September 1, 2015 to December 31, 2018. After this period, a rate of 15% became applicable. However, the 20% CSLL rate was reintroduced by Constitutional Amendment No. 103/2019, applicable from March 1, 2020. 

The relevant amendment introduced by Normative Ruling No. 1,942/2020 refers to the criteria that financial institutions must consider in the proportional calculation of the CSLL, considering the levy of different rates during the calendar year 2020. These criteria were provided by the RFB, as follows:

(i)    Article 30-A: establishes the criteria applicable to financial institutions under the actual profit method calculated on a quarterly basis, in relation to the first quarter of 2020; 

(ii)    Article 30-B: provides the criteria applicable to financial institutions under the actual profit method calculated on an annually basis, which must be adopted as of March 1, 2020, either under the monthly estimated regime as well as under the suspension or reduction trial balance sheets regime; and

(iii)    Article 30-C: establishes the criteria applicable for the calculation of the annual CSLL tax adjustment that must be carried out on December 31, 2020.

In addition to the criteria mentioned above, Normative Ruling No. 1,942/2020 provides alternative criteria for calculating the CSLL (e.g. Article 30-C).

We remain available to assist you and to provide any further clarification.