Differences between Brazilian and US tax returns

For smarter financial management, consultancy firm Drummond Advisors reveals taxes and makes comparisons

Comparing the tax policies of Brazil and the United States reveals significant disparities, which directly impact both individuals and legal entities. While Brazil is known for its complex and high tax burden, the United States operates a tax system that differs in structure and rates.

According to a survey conducted by Austin Rating with the help of data from Trading Economics, Brazil has the 88th highest income tax rate for individuals among the 146 countries surveyed, charging 27.5% of the amounts collected, while the United States has a higher maximum rate of 37%.

According to Joice Izabel, partner at Drummond Advisors, a consultancy with insight into the challenges of international transactions, this divergence has profound consequences for individuals and organizations in both countries, shaping everything from consumer behavior to business competitiveness . In this context, it is essential to understand the nuances and implications of these differences for a comprehensive view of global economic dynamics.

“There are some similarities in the tax returns of these countries, because, just like in the United States, Brazilian taxpayers are also considered global taxpayers. This means they must declare all their global income to the tax authorities, using applicable deductions and tax credits paid accurately, in accordance with current legislation,” explains Joice Izabel.

The Drummond Advisors partner also points out that “failure to comply with tax obligations can result in fines, interest charges and other legal consequences, underscoring the importance of promptly complying with tax laws.”

Drummond Advisors’ consultancy highlights the main points of divergence between countries.

Brazil

• Period for sending the annual individual declaration (DIRPF): Until 11.59pm on May 31st

• Possibility to extend deadlines: the Brazilian Federal Revenue Service does not allow the extension of the DIRPF

The penalty for missing the deadline can range from R$165.74 to 20% of the tax due, plus late payment interest. Furthermore, if the taxpayer fails to file the return and falls into the obligation, this may result in an omission of income and will have to file the return late. Additionally, you can leave the taxpayer’s CPF irregular with the Federal Revenue Service.

Penalties for non-compliance with tax obligations in Brazil also vary based on Brazilian tax legislation. Some examples of fines include:

• Penalty for late filing of the tax return: in Brazil the penalty for late filing of the tax return varies from 1% to 20% of the tax due, with established minimum amounts.

• Penalty for late payment of tax due: the penalty for late payment of income tax due varies depending on the type of tax and specific legislation. It is generally calculated as a percentage of the tax due and may be subject to late payment interest.

• Penalty for incomplete or inaccurate information: If a tax return or other tax document contains incorrect or incomplete information, the taxpayer may be subject to penalties that vary depending on the nature of the infraction and the value of the transactions involved.

Brazilians who own assets of any nature, tangible or intangible, held abroad, such as real estate, bank accounts, shares in other companies and fixed or variable income securities, must declare the Brazilian Capital Abroad (CBE) to the Central Bank, which can be annual or quarterly.

The annual declaration is valid for individuals and entities with foreign assets equal to or greater than $1 million. The quarterly filing applies to individuals and entities with foreign assets of $100 million or more. Anyone who misses the deadline, provides incorrect or incomplete data or even fails to make a declaration can receive a fine of up to R$250,000.

United States

• Period for submitting the annual personal income tax return: 15 April

• Possibility of extending the deadlines: the IRS provides for the possibility of extending the delivery deadline until October 15th, however it is not allowed to extend the deadline for the payment of the tax due by the private individual, i.e. the taxpayer must pay the tax due the full amount of tax due by April 15 and will be able to submit the full return to the government by October.

To request an extension on your tax return, you must file an extension request until the date set by the US government.

“Failure to comply with tax obligations generates civil and criminal sanctions. That’s why it’s so important for taxpayers to meet deadlines and fulfill their tax obligations in a timely manner,” says Joice.

In the United States, penalties for non-compliance with tax obligations can range, depending on the type of violation and individual circumstances, between $10,000 and $100,000.

Some of the common fines include:

• Fine for late filing of tax return.

• Fine for late payment of taxes due.

• Fine for incomplete or inaccurate information.

Individuals and entities who are US tax residents and who have a direct or indirect interest in financial accounts and investments outside the United States, the aggregate value of which is equal to or greater than US$10,000, must complete and submit the Declaration of bank accounts and financial investments abroad, the FBAR (Report on Foreign Bank and Financial Accounts)

The deadline for sending the form to the IRS is April 15th of each year and if it is not submitted the deadline is automatically extended to October 15th of the same year. Anyone who fails to file a return or provides incomplete or incorrect information can pay fines of up to US$100,000 or 50% of their account balance (whichever is greater).

Homework

inspires transformation in the world of work, in business, in society. Compasso, a content and connection agency, is born.

Source: Terra

Rose

Rose James is a Gossipify movie and series reviewer known for her in-depth analysis and unique perspective on the latest releases. With a background in film studies, she provides engaging and informative reviews, and keeps readers up to date with industry trends and emerging talents.