Taxes and contributions
The Legal and Tax System
Taxation in Brazil is mainly regulated by the 1988 Federal Constitution, the National Tax Code of 1966, and the Federal Income Tax Code.
Taxes are payable by all private business entities resident in Brazil, including corporations, limited liability companies, partnerships and sole partnerships (SCP), and branches and agencies of corporations with head offices abroad. Taxes are levied by the federal, state and municipal governments.
Brazil has a complex system of corporate taxation in which the federal government levies:
- (1) corporate income tax (IRPJ);
- (2) social contribution tax on profit (CSLL);
- (3) federal value-added or excise tax on manufactured goods (IPI);
- (4) financial transactions tax (IOF);
- (5) excise tax on cross-border royalties and services (CIDE);
- (6) social security financing tax on revenue (COFINS);
- (7) Social Integration Program tax on revenue (PIS/PASEP);
- (8) employer social security contributions (INSS);
- (9) rural property tax (ITR).
Import and export duties also are levied. There is no branch tax or alternative minimum tax.
The Brazilian states and the Federal District of Brasília impose a value added tax (VAT) on the circulation of goods and telecommunication and transportation services (ICMS), and taxes on inheritances, donations (ITCMD), and motor vehicles (IPVA).
Municipalities and the Federal District charge taxes on services (ISS), urban property (IPTU), and transfers of urban real estate (ITBI).
The residence of a company in Brazil is determined based on whether the company has been incorporated in accordance with Brazilian law.