The Brazilian System
The Brazilian tax system is notoriously complex. Some taxes are levied by the federal government, others by the State government, where the producing company is installed, yet others by the municipality.
In general, the rates vary by activity sector, where the taxpayer's business and economic capacity run. Small companies, for example, may have lower charges than large companies. According to the economic moment, tax collection also changes. This is an ever-changing system in Brazil.
Only at the federal taxes imposed on businesses are already very many, almost 70. But these 70 taxes are not levied all at once on all businesses. On average, larger companies pay around ten taxes in total, including state and municipal ones.
The federal taxes have a particular application. There are taxes on imports of foreign products on the export of domestic or nationalized products, income and profit, payroll, industrial products, rural property, financial transactions, credit, foreign exchange and insurance.
Check out below the main federal taxes:
Corporate Income Tax (IR): This tax is paid by companies domiciled in Brazil, whatever their purpose, nationality or participants in the capital stock. It is also levied on affiliates, branches, agencies or offices in the Country of companies headquartered abroad. Learn more about this tax.
Personal Income Tax (IR): This tax is paid by people residing or domiciled in Brazil, as well as people residing or domiciled abroad, who earn taxable income in Brazil.
Tax on Financial Operations (IOF): It is levied on operations involving credit, foreign exchange, insurance and securities (issuance, transfer, payment or redemption).
Tax on Industrialized Products (IPI): It is levied on industrialized products, whether domestic or foreign.
Rural Land Tax (ITR): Levied on all land property located outside the urban area, ranging up to 20%. The smaller the property area and the greater the usage degree, the lower is the rate. Half of what is collected goes to the city hall and the other half to the federal government.
Social Integration Program (PIS): Levied on domestic and foreign manufactured products and finances the unemployment insurance, the salary bonus and profit sharing for workers.
Universal Service Fund for Telecommunications (Fust): Levied on the gross operating revenues resulting from the telecommunications services provided in public and private schemes and finances the telecommunications sector for the needy.
The main body responsible for collecting federal taxes is the Federal Revenue of Brazil.