Withholding Income Tax (IRRF)

This chapter provides an overview of withholding income tax (IRRF—Imposto de Renda Retido na Fonte) in Global Payroll for Brazil and discusses how to:

• View dependents.

• Run the Income Tax report.

• Generate Declaration of Withholding Tax (DIRF) reports.

• Generate the Statement of Income and Withholding Tax (IREN) report.

• View delivered income tax elements.

Understanding Income Tax Withholding

Global Payroll for Brazil provides rules and elements to calculate and deduct withholding of income tax using the graduated tax rate for monthly payroll, 13th salary, and vacation payments.

This section discusses:

• Income tax rates and amounts.

• Allowable tax deductions.

• Income tax calculation.

• Special tax withholding situations.

Income Tax Rates and Amounts

To set up and maintain the parameters for calculating income tax withholding using the template provided by PeopleSoft, you must:

• Update the IRRF table when changes to deductible tax rates and installments occur.

  PeopleSoft delivers the IRRF table as a bracket (IR BR % IRRF). As the graduated tax table might vary during the year, you must maintain this bracket and retain the previous versions. The brackets are effective-dated. Calculations use the bracket in effect as of the payroll payment date.

• Update the following variables containing values for income tax calculation when changes occur:

  Variable	Description
  IR VR MIN IR	Minimum amount of income tax withholding.
  IR VR VRDED DEP	Amount of the deduction per dependent.
  IR VR VRDED APO	Retirement deduction amount.

• Ensure the elements composing the deductions for the income tax calculation are defined as members of the respective accumulator.

  The following table lists the accumulators for each type of income tax calculation:

  Income Tax Calculation Type	Accumulator
  Monthly payment	IR DEDUÇÕES
  13th salary	IR DEDUÇÕES 13S
  Vacation	IR DEDUÇÕES FER

• Ensure the elements composing the gross income for the income tax calculation are defined as members of the respective accumulator.

  These accumulators can include earnings and deductions such as Unjustified Absence.

  The following table lists the accumulators for each type of income tax calculation:

  Income Tax Calculation Type	Accumulator
  Monthly payment	IR RENDA BRUTA
  13th salary	IR REN BRUTA 13S
  Vacation	IR REN BRUTA FER

Allowable Tax Deductions

The accumulators for each type of income tax calculation (IR DEDUÇÕES, IR DEDUÇÕES 13S, and IR DEDUÇÕES FER) accumulate allowable tax deductions. Global Payroll for Brazil provides delivered deductions elements for the following allowable deductions:

• Alimony in compliance with court decision including pensions.

• Deductions for qualifying dependents.

• Contributions to social security (INSS).

• Contributions for private pension fund and the individual planned retirement fund (FAPI).

• Income from retirements and pensions.

Data for Retirement and Dependent Deductions

To ensure that the system calculates the proper deductions:

• Select the IR Ded Retirement check box on the Payee Parameters page (Global Payroll & Absence Mgmt, Payee Data, Define Payee Parameters BRA) for payees who are inactive retirees.

  Inactive retirees are entitled to an additional deduction from their gross income for income tax purposes.

• Enter dependent data on the Dependent Information - Personal Profile page in PeopleSoft Human Resources.

Calculating Dependents

Using the information entered for each dependent in PeopleSoft Human Resources (gathered using an array), the system uses the formula IR FM NUM DEP IR to determine whether each dependent meets the conditions that enable an employee to claim an income tax deduction for the dependent. For example, the dependent's economic status must be Dependent or Dependent/Beneficiary to qualify as a dependent for income tax purposes. The system flags each dependent that meets these criteria.

When calculating income tax, the system multiplies the total number of dependents by the deduction amount per dependent to determine the employee's total deduction amount for dependents.

You can view the number of dependents for income tax on the Review Dependent Data BRA page.

See Viewing Dependents.

See Also

Understanding Deductions

Tracking Dependent and Beneficiary Data

Defining Payee Parameters

Income Tax Calculation

Each calculation type has its own income tax deduction element.

To determine the income tax withholding, each income tax deduction element:

1. Runs a preprocess formula that determines the calculation base and stores it in a variable (IR VR REN LIQUID).

   The formula obtains the calculation base by deducting the income tax deduction accumulator from the gross income accumulator.

2. Runs the generic income tax calculation formula (IR FM IRRF).

   This formula is common to the deduction elements for all the income tax calculation types. The formula:

   1. Applies the tax rate from the IRRF table (IR BR % IRRF) to the calculation base and determines the amount to withhold for income taxes.

   2. Compares the calculated amount to withhold for income taxes to the minimum amount to withhold for taxes.

      If the calculated amount is less than the minimum amount, the employee's amount to withhold for income taxes equals zero.

The following table lists the income tax deduction elements and preprocess formulas for each income tax calculation type:

See Also

Defining Earnings

Special Tax Withholding Situations

This section provides information about special tax withholding situations.

Salary Advance

If the salary advance is completed within the month that the income is earned (just paid early within the same month) the tax calculation is normal. In this case, there is no Income Tax calculation. However, if the advance is paid in a month other than the month in which the respective payment occurred, the advance is taxed in the month in which it is paid along with other earnings for the same period. For this calculation use the variable IR VR REG CX.

Viewing Delivered Elements

The PeopleSoft system delivers a query that you can run to view the names of all delivered elements designed for Brazil. Instructions for running the query are provided in the PeopleSoft Enterprise Global Payroll PeopleBook.

See Also

Understanding How to View Delivered Elements

Viewing Dependents

This section discusses how to view an employee's dependents.

Page Used to View Dependents

Viewing an Employee's Dependents

Access the Review Dependent Data BRA page (Global Payroll & Absence Mgmt, Payee Data, Review Dependent Data BRA, Review Dependent Data BRA).

Number of Dependents

Dependents Detail

This group box displays a summary of the information entered for each dependent on the Dependent Information - Personal Profile page. Use this data to validate the number of qualifying dependents for each purpose that appears in the Number of Dependents group box.

Running the Income Tax Report

This section lists the page used to run the Income Tax Report.

Page Used to Run the Income Tax Report

Generating Declaration of Withholding Tax (DIRF) Reports

To set up parameters for DIRF reporting, use the DIRF Parameters BRA (GPBR_PARM_DIRF) component.

This section provides an overview of DIRF reporting and discusses how to:

• Generate the monthly DIRF report.

• Define parameters for the annual DIRF report.

• Generate the annual DIRF report.

Understanding DIRF Reporting

You can use Global Payroll for Brazil to produce a monthly report (GPBRDI01) that shows each individual's taxable income, deductions, and withholding tax for the reported month. The system can also generate the annual DIRF report (GPBRDI02, Declaração do Imposto Retido na Fonte).

Note. To identify who is responsible for producing the DIRF report for an establishment, use the Additional Info - Brazil page in the Administer Workforce business process of PeopleSoft Enterprise Human Resources.

See (BRA) Setting Up Brazilian Establishments.

Monthly DIRF Report

You can generate the monthly DIRF report for an entire company or a selected establishment. You can select the run types or pay groups to consider and can include employees, contingent workers, or persons of interest. When you run the report, you identify the elements that store the values for the taxable income, deductions, and withholding tax amounts that appear in the report.

This is simply a control report, once the DIRF is an annual and legal Brazilian report. This report enable you to have monthly control of the taxes and taxable amounts.

Annual DIRF Report

Before you can produce a company's annual DIRF report, you must use the DIRF Parameters page to select the default establishment and contact person responsible for submitting the report, and any additional data, such as employee ID and establishment ID, that will help you identify the individuals listed in the report. You also select the earnings and deductions to include in the report, and specify which elements represent taxable income, deductions, or withholding tax. (When you run the report, you can override the default values for the responsible establishment, company, or DIRF contact.)

Pages Used to Produce DIRF Reports

Generating the Monthly DIRF Report

Access the Monthly DIRF Report BRA page (Global Payroll & Absence Mgmt, Taxes, Monthly DIRF Report BRA, Monthly DIRF Report BRA).

Parameters

Control Type

To produce the report for all pay groups that are associated with particular run types, select By Run Type and enter the run types. To produce the report for selected pay groups, select By Pay Group and enter the pay groups and associated run types.

DIRF Data

Use these fields to identify the earnings and deductions that are to be included in the report.

Defining Parameters for the Annual DIRF Report

Access the DIRF Parameters BRA page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, DIRF Parameters BRA, DIRF Parameters BRA).

Establishment ID

Select the establishment that is responsible for producing the company's DIRF report.

Company Responsible

Identify the employee or non-employee who is responsible for generating the DIRF report.

Beneficiary Information

Individuals who are included in the report are listed by name. You can include additional identifying information, such as EMPLID (employee ID) and ESTABID (establishment ID) for each person. This is to format the user-field in the DIRF Records. Companies can define this content as desirable. Select the fields that contain the additional data and the order in which they are to appear in the report.

DIRF Data

Use these fields to identify the earnings and deductions that are to be included in the report.

Generating the Annual DIRF Report

Access the DIRF Report BRA page (Global Payroll & Absence Mgmt, Year-End Processing, DIRF Report BRA, DIRF Report BRA ).

Calendar Year

Enter the year for which you are reporting data.

Declaration Status

If you select Other as the declaration status, identify the event type, Dispossession or Termination, and enter the date.

Declaration Type

Select Original if this is the first time you are submitting this report. Select Rectifier if this report corrects one that was previously submitted. Enter the receipt number for the previously submitted report.

Overrides

Use this section to enter instructions for overriding the responsible establishment or company that is identified on the DIRF Parameters BRA page. The information that you enter here is used for this instance of the report only.

Generating the Statement of Income and Withholding Tax (IREN) Report

To set up parameters for IREN reporting, use the IREN Parameters BRA (GPBR_IREN) component.

This section provides an overview of the Comprovante Anual de Rendimentos Pagos e de Retenção de Imposto de Renda na Fonte - Pessoa Física report (Statement of Income and Withholding Tax or IREN report), lists prerequisites, and discusses how to:

• Define which deduction recipients to include in the IREN report.

• Define IREN parameters.

• Produce the IREN report.

Understanding the IREN Reporting Process

To produce the IREN report, you identify the elements that calculate the values shown in the report. To include deductions that were paid to certain recipients, you must select the recipients before generating the report.

Pages Used to Produce the IREN Report

Defining Which Recipients to Include in the IREN Report

Access the Recpnt/Benef Relationship BRA page (Global Payroll & Absence Mgmt, Payee Data, Net Pay/Recipient Elections, Recpnt/Benef Relationship BRA, Recpnt/Benef Relationship BRA).

For the selected employee, identify any deduction recipients that are to be included in the IREN report. Deductions paid to the selected recipient will be listed in the report along with the recipient's name. (Use the Add Deduction Recipients page to specify which deduction a recipient is to receive.)

See Also

Assigning Recipients to Deductions and Payees

Defining IREN Parameters for a Company

Access the IREN Parameters BRA page (Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, IREN Parameters BRA).

Each section of this page corresponds to a section of the report that has the same name. Map the report fields in each section to the elements that will provide the values for these fields.

Generating the IREN Report

Access the IREN Report BRA page (Global Payroll & Absence Mgmt, Taxes, IREN Report BRA, IREN Report BRA).

Org Relation (organizational relationship)	You can generate the report for employees, contingent workers, or persons of interest.
Income Nature	You can include salaried or unsalaried workers.
Responsible ID	Identify the person who is responsible for this report.
Date	Enter the date to print on the report.

Viewing Delivered Income Tax Elements

This section lists:

• Delivered income tax deductions.

• Delivered income tax earnings.

• Delivered income tax sections.

Note. PeopleSoft delivers a query that you can run to view the names of all delivered elements that are designed for Brazil.

See Also

Viewing Delivered Elements

Deductions for Income Tax

Global Payroll for Brazil calculates the following tax deductions:

Earnings for Income Tax

Global Payroll for Brazil calculates only one earning:

Income Tax Sections

Global Payroll for Brazil calculates the following tax sections: