Tax clearance certificate in Brazil
CND, short for Certidões Negativas de Débitos in Portuguese, is a tax clearance certificate issued by tax authorities — federal, state, or municipal — which states that your company has settled all its debt. It verifies that an entity had paid all its tax liabilities at the time the certificate was issued.
The company will need a Tax clearance certificate in order to apply for a loan or to show to your customers and vendors that you are paying your tax bills on time. Besides that, it is fundamental that your business have a tax clearance certificate in the event of a due diligence process.
Taxpayers have the right to receive a debt clearance certificate from tax authorities. A tax clearance certificate is only valid for a certain period of time.
There are several tax clearance certificates in Brazil. Following are some examples.
Municipal Tax clearance certificate
Each city has its own process of issuing a Municipal Tax clearance certificate. Usually, Municipal Tax clearance certificates are valid for 12 months from the date they are issued. Some local governments can charge the taxpayer in order to grant it.
State Tax clearance certificate
As with the Municipal Tax clearance certificate, each state has its own process of issuing a State Tax clearance certificate. The São Paulo State Tax clearance certificate is valid for six months from the date it is issued.
Federal Tax clearance certificate
The Federal tax clearance certificate is issued by the Department of Federal Revenue of Brazil, English for Secretaria da Receita Federal do Brasil. It covers all federal taxes, such as income taxes, as well as social security tax.
FGTS Tax clearance certificate
The FGTS Tax clearance certificate is issued by the Brazilian Bank Caixa Econômica Federal, also known as CEF. FGTS is the Government Severance Indemnity Fund for employees. The Fund is financed on a monthly basis by the employer. This clearance certificate is only valid for 30 days.
Labor clearance certificate
The Labor clearance is issued by the Labor Court, English for Tribunal Superior do Trabalho. This clearance certificate is only valid for 180 days.
Written by Thiago M. Silveira
Thiago M. Silveira is a Brazilian Chartered Certified Accountant (CRC) with more than 10 years of success in the accounting field, with insightful understanding in all aspects of accounting, financial reports preparation, local taxes and compliance in Brazil.
