Brazilian Tax System
Main Federal Taxes
Tax
Incidence
Tax Base
Rate
Upon
merchandise
shipment
(departure from
the Brazilian
territory) (on
the date of RE
registration at
Siscomex)19.
Value of exported goods.
30%, but it may Assessment20:
Exporter Statement
be raised or
lowered to meet Nature: Extra-fiscal22
the objectives
of Brazil´s
exchange rate
and foreign
trade policies.
The maximum
rate may be
raised up to 150%.
Levied on the
Import of foreign
goods and on
the accompanied
baggage of
travelers coming
from abroad
Upon the entry
of goods or
baggage in
the Brazilian
territory
(statement
of customs
clearance).
• Foreign Merchandise –
customs value
• Foreign
Merchandise
– Indicated in
the Common
External Tariff
(TEC), usually
ranging from 0%
to 35%.
• Baggage – taxation is
effected upon goods whose
value exceeds the exemption
quota, at a rate of 50%.
• Baggage –
50%
Acquisition of
the economic or
legal availability
of income
(product of
capital and/or
labor) and of
revenues of any
nature.
Income Tax
(IRRF)
Observations
Levied on
the export of
domestic or
nationalized
merchandises.
Export Duty (IE)
Import Duty (II)
Taxable Event
Availability
of income or
revenues
• Individuals: Personal
earnings.
• Legal Entity:
Taxable Profit: net profit of
the fiscal year. (mandatory if
total annual corporate revenue
exceeds BRL 48 thousand;
earnings abroad – subsidiary or
representative office; financial
institutions, factoring; and
companies entitled to specific
tax benefits and exemptions).
Estimated Profit: percentage
of the gross revenue earned
by the legal entity. (profit is
not determined by accounting
records).
Presumptive Profit: application
of definite coefficients to the
annual gross revenue earned
by the legal entity.
• Legal Entity:
Corporate
Income Tax at a
rate of 15% plus
a 10% additional
rate on monthly
income that
exceeds BRL 20
thousand.
• Individuals:
7.5% up to
27.5%.
Assessment:
By ratification23
Nature: Extra-fiscal
• Drawback24 (tax
exemption for imported
goods to be used in
the manufacturing of
exporting goods).
• Manaus Free Trade
Zone25: Import Duty
reduction of up to 88%
for raw materials to be
used in the manufacturing of products for the
domestic market.
Assessment:
By ratification
Nature: Fiscal26
• Simplified Taxation
Regime (SIMPLES):
one single rate
• annual gross revenue
is less than BRL 2.4
million;
• only individuals are
entitled to be members;
• no member is allowed
to be domiciled abroad;
• members are not
allowed to own other
companies that benefit
from the SIMPLES;
• the legal entity is neither entitled to operate
passenger transportation
services nor can it
provide services of intellectual, scientific
or artistic nature.
19
As established on the website of the Federal Revenue Service of Brazil - http://www.receita.fazenda.gov.br/manuaisweb/exportacao/topicos/conceitose-definicoes/imposto-de-exportacao-ie.htm.
20
The means through which liabilities are assessed.
21
The taxpayer or their attorney-at-law files the statement or provides the required information and the competent authority implements the assessment prior
to effecting the payment.
22
The purpose is to intervene in the economic domain with the aim of regulating certain sectors of the domestic economy.
23
The taxpayer or their attorney-at-law determines the amount to be paid and then pay it in advance with no prior evaluation of the competent authority.
24
For further information (in Portuguese) on Drawback in Brazil, go to: http://www.desenvolvimento.gov.br/sitio/interna/interna.php?area=5&menu=247
- http://www.comexbrasil.gov.br/conteudo/ver/chave/drawback/menu/63 - http://www.mdic.gov.br/arquivos/dwnl_1311196743.pdf .
25
The Brazilian Congress is voting (and likely to pass) the bills that create the Free Trade Zones of Sorriso, in the State of Mato Grosso, and São Borja, in the State
of Rio Grande do Sul: Bills no. 511/2009 and 130/2009, respectively, both originated at the Brazilian Federal Senate.
26
The purpose is to raise financial funds for the State.
Tax
Incidence
Tax on
Manufactured
Products (IPI)
Tax on Financial
Transactions (IOF)
Rural Real Estate
Tax (ITR)
Contribution of
Intervention in the
Economic Domain
(CIDE – Remessas
-Remittances)
Taxable Event
Rate
Tax Base
Observations
Levied on any
product that
undergoes
any process
that modifies
its nature or
purpose, or has
it enhanced
for subsequent
consumption.
• Customs
clearance (when
of foreign origin);
• Exit from
importer´s
(taxpayer)
facilities;
• Purchase at an
auction
• Imported Merchandise:
same tax base of the Import
Duty + Import Duty + Entry
Fees + Charges.
• Domestic Merchandise:
value of the transaction
upon exit of facility or
wholesale price.
• Auctioned Product:
Auction price.
Ranging from
0% to 330%
(depending on
how essential
the product
is and in
conformity with
the IPI Tax Rates
Table - TIPI27).
Assessment: By
ratification
Nature: Extra-fiscal
Levied on credit,
exchange,
insurance
and securities
transactions.
• Credit/Loan
transactions –
payment of bank
loans and similar
transactions;
• Exchange transactions – amount
of currency purchased or sold;
• Insurance transactions – issuance
of the insurance
policy or payment of insurance
premium;
• Issuance, transfer or payment of
securities.
• Credit Transactions: value
of obligation + interest;
• Exchange Transactions:
value in Brazilian currency;
• Insurance Transactions:
insurance premium value;
• Securities Transactions:
par value + premium
Ranging from
0% to 25%
(depending
on the
transaction28).
Assessment: By
ratification
Nature: Extra-fiscal
Annually levied
on rural real
estate.
Property, right
to use and enjoy
real estate
located outside
urban area.
Land value without
improvements.
Ranging from
0.03% to 20%
(depending on
land area and
degree of land
use).
Assessment: By
ratification
Nature: Extra-fiscal
Levied on
money
transferred
abroad by a
Brazilian source
for the payment
of royalties,
provision
of technical
services,
copyright and
other payments
related to
contractual
obligations
that involve
technology
transfer .
Payments/
remittances due
to nonresidents
in the form
of royalties,
technology
transfers,
technical and
administrative
services, technical
assistance and
related services.
Amount transferred to
nonresidents or domiciled
abroad which payment
is due under taxable
obligations.
10%
Assessment: By
ratification
Nature: Parafiscal30
Non cumulative
regime
Available in Portuguese at: http://www.receita.fazenda.gov.br/aliquotas/TabIncidIPITIPI.htm.
For further details (in Portuguese), go to: http://www.receita.fazenda.gov.br/aliquotas/impcresegcamb.htm.
29
Related legislation available at: http://www.planalto.gov.br/ccivil_03/decreto/2002/d4195.htm e http://www.planalto.gov.br/ccivil_03/LEIS/L10168.
htm
30
The political entity (Federal Government, Member-States, Federal District and Municipalities), in compliance with the legislation in force, grants taxation
capacity to a third party (governed either by public or private law), enabling such party to collect the tax, inspect its requirements and make use of the earned
revenues to implement its objectives.
27
28
Tax
Incidence
Contribution of
Intervention in the
Economic Domain
(CIDE – Combustível
– Oil & Gas-related
products)
Contribution for
Social Integration
Programs (PIS) and
Contribution for the
Financing of Social
Security (Cofins)
Social
Contribution on
Net Income of
Legal Entities
(CSLL)
Social Security
Contribution
31
Taxable Event
Rate
Observations
The Decree no.
7,764/2012
lowers to zero
the rates levied
on kerosene,
low-sulphur fuel
oil, liquefied
petroleum gas,
ethyl alcohol,
gasoline and
diesel fuel.
Assessment: By
ratification
Nature: Parafiscal
Tax Base
Levied on the
import and sale
of oil and gasrelated products
Import and sale
Product Quantity
operations,
effected in the
domestic market,
of the products
listed below:
• gasoline;
• diesel fuel;
• kerosene;
• fuel oil;
• liquefied
petroleum gas
(LPG);
•ethyl alcohol.
Levied on the
turnover or
revenues of
legal entities
governed by
private law;
The earning of
revenues by
the legal entity
governed by
private law.
Total amount of the monthly
turnover (deductions and
exemptions as provided by
law).
Presumptive
Profit –
Cumulative
Regime:
PIS: 0.65%
Cofins: 3%
Taxable Profit –
Non-Cumulative
Regime:
PIS: 1.65%
Cofins: 7.6%
The import of goods
and services31 is
subject to PIS and
Cofins at a combined
rate of 9.25%.
Acquisition
of economic
or legal
availability.
Acquisition of
economic or
legal availability:
a) of income
(the product of
capital);
b) of revenues
(corporate
profit).
Net profit of the fiscal year
previously adjusted for
Income Tax purposes.
9%.
The taxpayers
that choose the
presumptive profit
regime are subject to
a presumptive base of
12% or 32%.
Levied on
the payroll of
employees and
on-call workers.
Payment for
service rendered
by employees
and on-call
workers.
Total of paid salaries, either
due or credited during the
related month to employees
and on-call workers.
20%
Financial
Institutions:
15%
In addition to the 20%
rate, the payroll of
employees is subject
to the following
contributions:
• Contribution of
Third Parties: 3.1%;
• Contribution to the
National Institute
for Colonization and
Agrarian Reform
(INCRA): 0.2%;
• Contribution to
Education (SE): 2.5%;
• Contribution to
Labor Accidents (RAT):
1% and 3%;
Total levied on
payroll: ranging from
26.8% to 28.8%.
Further details available at: http://www.receita.fazenda.gov.br/pessoajuridica/pispasepcofins/IncidenciaExportServico.htm#Fato%20gerador. rther
International Treaties on Double Taxation32
Treaties to Avoid
Double Taxation
(effective)
With the aim of avoiding double taxation of income and capital, Brazil has signed bilateral tax conventions
(which are still effective) with the following countries: South Africa; Argentina; Austria; Belgium; Canada;
Chile; China; South Korea; Denmark; Equator; Spain; the Philippines; Finland; France; Hungary; India; Israel;
Italy; Japan; Luxembourg; Mexico; Norway; the Netherlands; Peru; Portugal; Czech Republic; Slovakia;
Sweden; Turkey and Ukraine.
Main State Taxes33
Tax
Incidence
Levied on operations
involving the
circulation of goods,
on interstate and
inter-municipal
transportation and
communication
services.
Tax on the
Circulation of
Goods and Services
/ VAT (ICMS)
Inheritance
and Gift Taxes
(ITCMD)
32
33
Exports: exempt
Imports: taxed
Levied on the transfer
of real estate,
securities, credit,
shares, membership
interests, investments
and assorted
assets, as well
as on the rights
thereof, acquired
through donation or
inheritance.
Taxable Event
Tax Base
Rate
Observations
I – exit of merchandise;
II – supply of food &
beverage;
III – transfer of stored
merchandise;
IV – transfer of
merchandise ownership;
V – upon the provision of
transportation services;
VI – termination of a
transportation service
initiated abroad;
VII – upon the provision of
communication services;
VIII – supply of merchandise
combined with the
provision of services;
IX – customs clearance
(imported merchandise);
X – delivery of
commissioned service
performed abroad;
XI – adjudication (in a
public bidding) of seized
goods;
XII – upon the entry of
lubricants and fuel not
intended for commercial use;
XIII – upon the use of a
service which has been
initiated in another State.
Total value of
the operation
involving the
circulation of
goods or the
amount charged
for the provision
of the requested
service.
Intra-State and
Assessment: By
Interstate: 7% and ratification
12%, respectively. Nature: Fiscal
Imports: 4%
(the final
manufactured
product must
feature more
than 40% of
imported parts/
components).
Non Cumulative
Regime
Gift – property transfer
(delivery or registration).
Property value
determined
on the date of
appraisal.
Up to 8%
Assessment: By
Declaration
Nature: Fiscal
Inheritance – opening of
the succession (death).
For further information on bilateral or multilateral acts implemented by the Brazilian Government, go to: http://dai-mre.serpro.gov.br/.
Including the Federal District.
Tax
Incidence
Tax on Vehicles
(IPVA)
Taxable Event
Levied on the
Ownership of the motor
ownership of cars and vehicle.
motorcycles.
Tax Base
Reference value
(appraised in
manufacturing
year), make and
model of the
vehicle.
Rate
Observations
2% to 4%
Assessment:
(depending on the Official
State).
Assessment34
Nature: Fiscal
Main Municipal Taxes17
Municipal
Services
Tax (ISS)
Tax
Incidence
Taxable Event
Tax Base
Rate
Levied on the
provision of services
not disciplined by
the taxing power of
the State.
Provision of services set
forth in municipal law.
Amount charged
for the provision
of the requested
service or single
taxation.
2% and 5%
(depending on the
type of service).
Assessment: By
ratification
Nature: Fiscal
Levied on the
transfer of the
ownership of real
state and the rights
thereof.
Non gratuitous inter
vivos conveyance of
real estate and property
rights thereof, excluded
security interests and
equitable titles (real estate
registration).
Selling value of
the property or
the transferred
rights
There is no
minimum36 or
maximum rate set
forth in federal
law (it is therefore
established by
each municipality).
Single rate,
non-progressive
regime.
Assessment: By
Declaration
Nature: Fiscal
Levied annually on
the ownership of
urban real estate.
Ownership, right to use
and enjoy or possession of
real estate located in an
urban area.
Real estate
market value.
There is no
minimum or
maximum rate set
forth in federal
law (it is therefore
established by
each municipality).
Escalation criteria:
location, value,
use and social
function.
Assessment:
Official
Assessment
Nature: Fiscal
Real Estate
Conveyance
Tax (ITBI)
Urban Real
Estate Tax
(IPTU)
Observations
The creditor of the tax is fully responsible for the assessment of the liability.
Including the Federal District.
36
The minimum rate is established at around 2%.
34
35
*This document was prepared by the Legal Unit of Apex-Brasil in January, 2013. Team: Silvia Menicucci (Head of Unit), Patricia Gonçalves dos Santos (Legal
Manager for International Affairs) and Camila Paschoal (Attorney). English version: Simonny V. Soares
** This document does not replace legal advice from an attorney.
*** The information disclosed in this document may be freely reproduced, provided the source is acknowledged.