Brazil

Financial Year – 1 January to 31 December
Currency – Brazilian real (BRL)

Corporate Tax Summary

Residence – A company is resident in Brazil if it is incorporated in Brazil.

Brazilian legislation does not clearly define permanent establishment (PE). However, there are certain articles in Brazilian tax law that could create a PE situation for a non-resident trading in Brazil. According to the tax law, non-residents operating in Brazil through commissionaires, legal representatives, agents and commercial representatives may be deemed to be Brazilian taxpayers subject to taxation on profits.

Basis of Taxation – Resident companies are taxed on worldwide income. A non-resident company generally pays taxes only on income derived from Brazilian sources. The tax rates and treatment are the same for companies and branches of foreign companies.

Reference
Corporate Income Tax Rate (%)34%
Branch Tax Rate (%)34%
Withholding Tax Rate:
Dividends – Franked0%Dividends related to earnings generated and payable by a Brazilian company to any shareholder (Brazilian residents or not) are not subject to Withholding Tax (WHT) in Brazil.
Dividends – Unfrankedn/a
Dividends – Conduit Foreign Income0%Dividends related to earnings generated and payable by a Brazilian company to any shareholder (Brazilian residents or not) are not subject to Withholding  Tax (WHT) in Brazil.
Interest15 to 25%Payment by a Brazilian party to a non-Brazilian resident of interest on loans is subject to WHT at a rate of 15% or 25% if the beneficiary is domiciled in a Favourable Tax Jurisdiction (FTJ).
Royalties from Intellectual Property15 to 25%The remittance or payment of any of these (industrial or intellectual) royalties is subject to WHT, which is generally at the rate of 15% or 25% if the beneficiary is domiciled in an FTJ.
In addition to WHT, the payment of royalties is subject to the “Contribution of Intervention in the Economic Domain” (CIDE) tax at a rate of 10%.
Fund Payments from Managed Investment Trustsn/a
Branch Remittance Taxo%
Net Operating Losses (Years)
Carry Back0
Carry ForwardIndefinite

Individual Tax Summary

Residence – Individuals are considered to be resident in Brazil for tax purposes if they meet any of the following criteria:

  • Individuals living in the country on a permanent basis.
  • Holders of permanent resident visas. Resident status begins on the date of arrival in the country.
  • Holders of temporary resident visas with a local labour contract. Resident status begins on the date of arrival in the country.
  • Holders of temporary resident visas without a local labour contract and who have been in the country for at least 183 days during any 12 month period. Residence status begins on the 184th day of presence in Brazil.
  • Brazilian citizens who had become non-residents and returned to Brazil permanently. Resident status begins on the date of arrival in the country.
  • Former resident taxpayers who left Brazil temporarily or permanently without obtaining a tax clearance certificate before departure. These individuals are deemed to be resident taxpayers for a 12 month period following their departure.

Basis of Taxation – Resident taxpayers are generally taxed on worldwide income, with a tax offset for foreign tax paid on foreign income up to the amount of Brazilian tax payable on that income. Gross income is taxable whether it is received in cash or in kind. Income includes compensation, directors’ fees, interest and dividends from foreign sources, rental income and certain capital gains. Taxable compensation consists of salaries, wages, bonuses, fees, commissions, foreign service premiums and other types of remuneration.

Filing Status – Each taxpayer must file a separate return each financial year

Personal Income Tax Rates

Taxable IncomeTax Payable – ResidentsTax Payable – Non-Residents
Up to 22,847.760%15 to 25%
From 22,847.77 to 33,919.807,5%15 to 25%
From 33,919.81 to 45,012.6015%15 to 25%
From 45,012.61 to 55,976.1622.5%15 to 25%
Over 55,976.1627.5%15 to 25%

Goods and Services Tax (GST)

RateSeveral
Taxable TransactionsBoth the Federal and State governments impose Value Added Tax (VAT) type taxes in Brazil. Each manufacturing plant or branch of a Brazilian company is generally considered an autonomous tax unit for both federal and state VAT purposes.

Federal Value Added Tax (IPI)
Federal VAT (Imposto sobre Produtos Industrializados, or IPI) is charged on imports of goods, on the first sale of imported goods and on transactions involving manufactured goods. Exports are tax exempt. The tax rate varies depending on the product traded and ranges from 0% to 365%.

State Value Added Tax (ICMS)
State VAT (Imposto sobre operações relativas à circulação de mercadorias e sobre prestações de serviços de transporte interestadual e intermunicipal e de comunicações, or ICMS) is levied on the import of goods and on the movement of imported and manufactured goods, even if between branches of the same legal entity. ICMS tax rates vary according to the state where the company and the acquirer of the goods are located. Imports are generally subject to a 17% or 18% rate, while local transactions are subject to rates varying from 7% to 18%.

Municipal Service Tax (ISS)
Municipal service tax (Imposto sobre serviços de qualquer natureza, or ISS) is charged on the rendering of certain services included in a Federal list of taxable services. Rates vary from 2% to 5%.

Turnover Taxes (PIS and COFINS)
PIS (Programa de Integração Social) and COFINS (Contribuicão Social para Financiamento da Seguridade Social) are turnover taxes charged on gross receipts under two different regimes: non-cumulative; or cumulative. Under the non-cumulative regime, PIS and COFINS are generally charged at a combined rate of 9.25% on gross receipts. Tax credits are allowed for certain business-related costs and expenses, which may be used to offset PIS and COFINS liabilities. Brazilian taxpayers who use the cumulative regime are subject to a reduced PIS and COFINS tax rate (a combined rate of 3.65%) but without any tax credits.

RegistrationSeveral
Filing and PaymentSeveral

Other Taxes Payable

TaxReference
Payroll TaxEmployees who receive remuneration from a Brazilian source are subject to local social security tax, withheld by the employer. Contributions range from 8% to 11%, depending on the amount of compensation, with a maximum monthly contribution of BRL 375.82 (as of 1 January 2010). The contribution for companies ranges from 26.8% to 28.8%, depending on the type of activity, calculated on the employee’s total monthly compensation.
Payroll TaxTax on the Disposal of Real Estate (ITBI)
The municipal tax on the disposal of real estate (Imposto sobre Transmissão inter-vivos de Bens Imóveis pr, or ITBI) is levied in the case of a burdensome real estate transfer, such as a sale. This tax is also required in specific situations, such as for mortgage guarantees. Transfers of real estate resulting from corporate reorganisations or incorporation may be exempt from ITBI if the corporate reorganisation or incorporation does not represent a prevalent activity of the acquiring company. As an example, in the Municipality of São Paulo the ITBI tax rate ranges from 0.5% to 3%, to be calculated on the market value of the transferred real estate.Tax on Inheritance and Donations (ITCMD)
Tax on Inheritance and Donations (Imposto sobre Transmissão Causa Mortis ou Doação, or ITCMD) is levied on the complimentary transfer of any assets and equity rights, which means it applies to donation or inheritance transfers. Each state determines the tax rate applied up to the maximum percentage established by the Federal Senate, which is currently 8%. In Sao Paulo, for example, the tax rate is currently 4%, to be applied upon the market value of the transferred real state.
Land TaxFederal Land Tax (Imposto sobre Propriedade Territorial Rural, or ITR) is levied annually on the ownership or possession of real estate in rural areas. Rates vary from 0.03% to 20% depending on the value and level of utilisation of the land.

Last updated: 10.06.2020

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