ECF 2022: start preparing your company with a preventive review

ECF reviews ensure data quality origin, minimizing risks of being issued a deficiency notice and having to file a rectification.

By Glauciele Knupp

Updated: 05/19/2022

In an environment dominated by technology used for supervision purposes, ECF’s preventive review becomes a good starting point to certify the integrity of economic, accounting and tax-related data that should be submitted to the Federal Revenue Office.

Over the past year, that agency notified more than 58 thousand companies regarding inconsistencies found between their ECF and other information submitted to their database in 2018 and/or 2019. At the time, a deadline for spontaneous correction was established, whereas no fines were issued, this was still a demonstration of fiscal strictness.

In 2022, the deadline for submitting ECF is August 31 (read more here). In face of the complexity of this obligation and the strict cross-referencing in force, it is important to prepare for this submission straight away.

A preventive review of the content that feeds ECF minimizes the risk of a company facing penalties for errors or divergencies. The fines can get up to BRL 100 thousand for corporate taxpayers that have had a gross total revenue equal to or lower than BRL 3.6 million in the previous calendar year.

In other cases, the taxpayer may have to afford BRL 5 million for infractions.

Check out the benefits brought by the preventive review:

What is ECF?

Tax Accounting Bookkeeping (ECF) is a statement comprised of accounting information originated from the Digital Accounting Bookkeeping (ECD), information related to the determination of IRPJ and CSLL, and the data arising from these operations, such as transactions with related parties, import and export operations, amongst others.

What companies are mandated to submit ECF?

Every corporate taxpayer whose taxes are levied on taxable profit, presumptive profit or estimated profit must submit an ECF. Check out more details here.

Why is a 2022 ECF preventive review so important?

The correct completion of the ECF is essential for assessing and formalizing IRPJ and CSLL debts and credits. This previous work reviews the determination of such taxes and, also, of ECD, a bookkeeping that is going to work as the basis for filling the ECF.

Why should you start working on this now?

ECF is an accessory obligation that marks the closing of the fiscal year, and for more safety and compliance in regard to the information detailed in it, it is crucial to pay attention to three main topics:

1. ECD Review

ECD is the base for filling ECF. One error on the first one may cause failures on the latter. As 2022 ECD must be submitted to the Federal Revenue Office up to June 30, such submission is already considered a preparation stage for a correct ECF.

2. IRPJ and CSLL determination review

Another point that deserves to be highlighted is the determination of IPRJ and CSLL. The prior review of the determination of direct taxes is crucial for the submission of ECF. Besides granting more safety, this analysis may also identify failures and possible tax credits, as retained values, undue payments or overpayments that can be compensated.

3. Cross-reference of the remainder of accessory obligations

The prior cross-referencing of accessory obligations is extremely important to mitigate risks and guarantee full security in the information being submitted to the Federal Revenue Office. This process enables inconsistencies to be identified earlier and, in some situations, the assessment of the need of rectifying accessory obligations.

How to perform an ECF review?

The review may be done by a specialist on accounting or tax-related topics. At Domingues e Pinho Contadores, that counts also on the support of analytical software that automatically cross-reference all accessory obligations, granting total safety and validation to information to be submitted to the competent authorities.

The preparatory work for the submission of ECF may point out signs of errors made in previous years. When that happens, it is recommended that a rectification pack is prepared, anticipating any issues with the tax authorities.

The methodology used by DPC on its analysis maps eventual improprieties and divergencies that may lead to a notice of deficiency.

Accounting and tax-related intelligence to assist your company

DPC assists its clients in doing the prior reviews needed for the due compliance with accounting and tax-related obligations.

Companies that do not count on this support and follow-up, or that do not have access to the adequate systems may also come to DPC for specific ECD and ECF submissions, as well as for preventive reviews.

DPC’s team also promotes in-company trainings regarding the rules and nuances of ECF. Count on this support: dpc@dpc.com.br.