Brazil — State Value-Added Tax (ICMS)
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Brazil's general VAT rate is 42%, with other rates including NA that can apply to certain transactions. The State Value-Added Tax (ICMS) is administered by the Ministry of Finance (http://www.fazenda.gov.br) in Brasília.
Brazil has a highly complicated VAT tax system, with multiple levels of tax that can be as high as 42% when combined. The major consumption taxes are as follows:
IPI: 0%–365% (Imposto sobre produtos industrializados, or "Tax over industrialized products", a Federal level tax
ICMS: 0%–35% (Imposto sobre circulação e serviços, or "Tax over commercialization and services", a State level tax
ISS: 0%–5% (Imposto sobre serviço de qualquer natureza, or "Tax over any service", a City level tax
PIS-PASEP: 0.65%, 1.65% (Federal-level gross revenue tax)
COFINS: 3%, 7.6%.
Brazil is a member of the Mercosur Member trading bloc, which may affect international VAT collection and regulations.
Consumption Taxes in Brazil
Brazil has multiple consumption taxes, which apply in different situations depending on what purchase is being made. These taxes include the following:
Federal Value-Added Tax (IPI)
Municipal Service Tax (ISS)
Federal Gross Receipt Contributions (PIS-PASEP/ COFINS)
Imposto sobre circulação de mercadorias e serviços (ICMS)
Imposto sobre produtos industrializados (IPI)
Imposto sobre serviços (ISS)
Contribuição para os programas de integração social e de formação do patrimônio público (PIS-PASEP)
Contribuição para o financiamento da seguridade social (COFINS)
These taxes were introduced in Brazil at the following times:
Brazil VAT rates for 2017
- 0% to 35% (for supplies in the same state)
4%, 7% or 12% (for supplies made to a taxable person in a different state)
- 0% to 365% (depending on the IPI tariff table classification for the goods)
- 0% to 5% (depending on municipality and nature of service)
- 0.65% (for taxpayers taxed under the deemed corporate income tax method of calculation, under the cumulative system) 1.65% (for taxpayers taxed under the annual actual income tax method, under the non-cumulative system)
- 3% (for taxpayers taxed under the deemed corporate income tax method of calculation, under the cumulative system) 7.6% (for taxpayers taxed under the annual actual income tax method, under the non-cumulative system)
Brazil VAT number format
Businesses in Brazil that are required to collect tax will be issued an identification number. Tax identification numbers can be verified with the Ministry of Finance, and will follow a certain format. The VAT number format is nn.nnn.nnn/nnnn-nn (this ID serves in all tax matters).
- ICMS, ISS,
- See section headings
Brazil State Value-Added Tax (ICMS) Thresholds
These are the revenue thresholds at which businesses in Brazil are required to start collecting and remitting tax.
- ICMS, IPI and ISS
- Commencement of taxable activity
- Commencement of sales activity (including receipt of non-operational revenue, such as rent)
Brazil VAT return periods
Businesses in Brazil that are required to collect tax from consumers must file regular tax returns with the Ministry of Finance in Brasília. Brazil's VAT return periods are:
- Monthly and every year
- Monthly (depending on the municipality where the taxpayer is located)
Recovery of VAT by non-established businesses
Non-established businesses are small, unincorporated businesses that sell taxable goods and may consist of a single individual, or several. Non-incorporated businesses in Brazil are not required to collect taxes from the consumer.
Brazil VAT Refunds
Many countries allow tourists, and others making purchases for export, to receive a VAT refund on exiting the country (or make purchases VAT free). While we don't have data on the Brazil VAT refund program, more info can be obtained from the Ministry of Finance.
Brazil Tax Sources & Citations
- EN: Brazil Value Added Tax
- RU: НДС
- CN: 增值税
- Brazil Ministry of Finance (http://www.fazenda.gov.br)
- Ernst & Young global VAT tax study, Brazil (updated 2017)
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