ONE OF THE WORLD’S MOST COMPLEX TAX SYSTEMS – BRAZIL HAS OVER 80 DIFFERENT TAXES AT FEDERAL, STATE, AND MUNICIPAL LEVEL.
Despite seemingly moderate tax rates, tax revenue accounts for 33% of Brazilian GDP – one of the highest of all LATAM and Caribbean countries (OECD, 2018).
Overview of Transactional Taxes:
The complexity of the Brazilian tax system, split into 3 levels of jurisdiction, presents challenges for those doing business in Brazil:
- Corporate Income tax (IRPJ)
- Social contribution tax on profits (CSLL)
- Federal level value added tax on industrialised products (IPI). Similar to Excise duty
- Tax on financial transactions / forex (IOF)
- Excise tax on cross border royalties and services (CIDE)
- Social security financing tax on revenue (COFINS)
- Social integration program tax on revenue (PIS)
- Employer social security contributions tax (INSS)
- Rural property tax (ITR)
State Taxes – 26 Brazilian states and 1 Federal district all impose value-added taxes:
- ICMS tax on circulation of goods
- ICMS tax on telecommunications and transportation services
- ICMS-ST Regime – Imposed for certain goods in each state, a single taxpayer is liable for collecting the tax of all parties up to the consumer
- DIFAL – Differential tax collection for cross-state transactions.
Municipal Taxes – Taxes levied on individuals or corporations who are rendering or procuring a service:
- Tax on services sales or purchases (ISS)
- Urban property tax (IPTU)
- Transfer of urban real estate tax (ITBI)
New legislations or updates run rate:
More than 40 new or updated legislations per day