For those planning a prolonged stay or establishing a business in foreign country it is important to first acquire information about regulations existing in that location and of special concern are tax regulations. Every country has its own set of identification methods for the tax purposes, although their range of application and name may vary greatly depending on tax regulations established. Among famous and certainly tempting options Brazil definitely stands out, being a country with many famous cities that attract tourists from all over the world. Maybe opening a business in Rio de Janeiro, Salvador or São Paulo is an option you are considering, in which case learning some basic information about Brazilian tax regulations might be necessary.
CNPJ? CPF? What is the difference?
CNPJ stands for Cadastro Nacional da Pessoa Jurídica, which is National Registry of Legal Entities, meanwhile CPF – Cadastro de Pessoas Físicas is a Registry of Natural Persons. To simplify one could simply state that CPF is for individuals, while CNPJ is for companies, however the differences do not end there. Upon registering in one of the mentioned registries an exclusive number will be issued to the regular entity. Identification numbers differ depending on the registry, but the easiest way to differentiate between them is to check digits. CNPJ number consists of 14 digits, while CPF has only 11. Do keep in mind that both of those also exist in form of digital certificates with a limited validity from one to three years depending on option chosen. They are available in two forms – first one being stored on your computer and the second being stored on mobile device – smart card or token used to store data.
These numbers are not completely random and some information can be obtained with some basic knowledge. CNPJ consists of three parts within fourteen digit number:
- First eight digits being the registration number unique to the entity
- Following four digits corresponding to the headquarters (0001) or branch (0002 and above)
- Final two digits being the check digits
When thinking about these registries the question that comes to mind is one questioning the purpose and benefits of registering in the first place. The answer is quite simple, because without it your range of business activities in Brazil is limited. Even something as basic as opening a bank account requires identification number and although foreign companies can get away with injecting investment funds without registration by making use of representative share certificates or other transferable securities, there are a lot of activities being restricted by not being registered. Secretaria da Receita Federal or Department of Federal Revenue made it obligatory for all Brazilian companies to register for CNPJ and among many reasons for its existence is to decrease the chance of fraud occurring. It is important to remember that in case of owning assets in Brazil that are subject to being in public register you are obliged to register even as a foreign company.
When it comes to scamming, there are countless methods, but with development of technology and advancement in procedures it became much easier to identify a fraud attempt due to which many became outdated. But when it comes to Brazil in aspect of CNPJ, the most common are two ways of scamming, which are fake entity cloning and through the use of fake website. The first method is done by fake entity using regular entity’s CNPJ to apply for credit or in banking transactions. The second involves making fake website with the same information as original website, however the fake fails to provide services that original would. In most cases a simple caution is enough to prevent a tragedy from happening, government agencies provide a free way to verify CNPJ through an online service. Checking the status of entity is certainly a good way to verify our suspicions.
Obtaining CNPJ requires going through the process of company registration in State Board of Commerce. Although the process might differ slightly depending on the situation in general it involves appointing a legal representative, whose existence is required in order to complete the next step, which is registration in State Board of Commerce. After that CNPJ can be obtained at the Federal Revenue Bureau, which is then registered at the Brazilian Central Bank. This allows the process of registration at the Local Municipality and obtaining the required licences to go smoothly.
If the whole process seems complicated, then there are always methods to make it easier. The whole process can be guided and completed effortlessly by making use of services offered by agencies specializing in this aspect. There are many companies offering their services to complete the registration process as quickly and smoothly as possible, as well as providing guidance in form of consultations and advice in case of any troubles you might encounter.