Brazil-Taxes

 

Brazil V.A.T. and Other Taxes

 

Brazil V.A.T

average state V.A.T. rate in Brazil (ICMS) is 17%.
In Sao Paulo the standard rate is 18%, while in Rio de Janeiro the rate is 19%.
The average federal V.A.T. rate is 20%.
Rates of inter-state supplies within Brazil are 7%-25%. The 7% rate relates to basic food products etc.
Certain products are exempt from VAT, e.g. books, newspapers. fruit and vegetables.
Exports are exempt from VAT.

Brazil Real Estate Taxes

Brazil Real Estate Transfer Tax
The tax is imposed on the buyer of real estate.
The tax rates are 2%-6% of the sale value.

Brazil Real Estate Property Tax
 
The annual tax is imposed by the local authority, the rates change from city to city.
The rates are 0.3%-1% of the market value.
Brazil Rural Property Tax
 
The annual tax is imposed on rural property.
The tax rates are 0.03%-20% depending on the location and use of the property. 

Brazil Income Taxes

Last partial update, February 2010

Individual Income Tax: Brazil's individual income tax rates for 2010 are progressive, from 7.5% to 27.5%.

Personal annual tax rates 2010 (BRL)

Income (BRL)	%
1-17,208	-
17,209-25,800	7.5
25,801-34,392	15
34,393-42,984	22.5
over 42,984	27.5

Note: Nonresidents pay a flat 27.5% tax on income earned in Brazil

Corporate Tax:  
Brazil's corporate tax rate for 2010 is 34%.The tax consists of a basic tax of 15%. There is also a surtax of 10% for annual income of over BRL 240,000, about $ 110,000. Additonal 9% are added for social contribution on net profits.
 
Capital Gains: Capital gains of companies are added to the regular income.
Individuals: Pay 15% tax on capital gains, dividend income from local companies is tax exempt.

Residence

A foreign company is resident if incorporated in Brazil.
An individual is resident when holding a permanent visa, or a temporary visa with an employment agreement, or even without an employment agreement, when staying in Brazil for more than 183 days within 12 months.

Brazil Tax Deductions

• Losses are carried forward indefinitely. In future years only 30% of the current year taxable income can be set off against the loss.
• Depreciation is deducted using the straight line method. Companies working in 2 shifts can claim 150% of the standard rates, while companies working in 3 shifts are entitled to 200% of the standard rates.
• Companies involved in development of technical research can use accelerated depreciation for tax purpose.
• There is no company consolidation for tax purpose.
• Thin capitalisation rules relating to interest expenses are in effect in Brazil from 1.1.2010.

Brazil Personal Credits and Deductions

For Brazilian residents, the first annual income of BRL 17,208 is tax exempt.
There is a standard monthly deduction for each dependant.
Education expenses are deductible, up to a limit.
Deductions are also permitted for social security payments by an employee, payments to private Brazilian pension plans, up tp a limit, and for alimony payments.

Deduction of Tax at Source

In Brazil tax is deducted at source from the following payments to non residents:
Dividend- 0%.
Interest- 15%/25%.
Royalties- 15%.
Services -15%.

Social Security

The contributions by the employer and the employee are subject to to ceiling defined by law.

Employer: 37.3% of the gross salary, 28.8% social security and 8.5% for severance fund.
Employee: 7.65%-11% of the gross salary. The employee's payment, which is capped, is based on a "contribution salary table", provided by the government.