Brazil Taxation

Brazil applies tax to many things and there are 3 main systems of taxation.

National, State and City all have their own taxes to charge and issue.

Taxes pay or contribute towards a range of public services. A public service could recieve funding from one, two or all three taxation systems.

The Government has a Union that manages tax. Tax is charged upon almost everything.

National Tax

National Tax is paid by;

Companies importing and exporting products, goods and services.
Companies pay a tax from the equity they hold (calculated at a set rate of 15 percent with an additional 10 percent if equity is over $20,000 a month).
Companies and individuals taking out financial credit e.g. bank loans and mortgages pay tax to do so (based on the amount borrowed).

State Tax

There is a state taxation system for the commercialisation of products and it is called ICMS.

Each state has this tax and set their own levels and laws. With 75 states and varying levels industry can be manipulated and potentially end up where its cheap to operate and not necesserialy in the place with the right level of expertise and skills to produce the products.

This state tax is charged to businesses in several forms including when selling, moving, preparing, and purchasing products.

Example: Coffee Production
1. Tax at point of gathering coffee tree
2. Tax to move it to a place where it can be prepared into end product
3. Tax on any other materisls purchased to create the end product such as packaging and equipment
4. Tax on end product
5. Tax on distribution of product
6. Tax on the sale of product

New Business Succsess

Government statistics here have shown that 50 percent of new businesses fail within their first year in operation in Brazil.

Alongside the technical skills to create and operate a buisness here the business owner must also have a good knowledge of taxation laws or risk falling short of compliant which I believe warrants penalty of a financial nature.

City Tax

This type of taxation includes when a house is sold or gifted to someone.

This tax is calculated from the increase in value for the original purchase.

E.G. a house bought at $50,000 and sold at or worth $60,000 will have to pay 2.5 percent tax on $10,000.

Taxation Upon Earnings

This comes within the National Tax Bracket and is the tax deducted from an employees overall monthly pay. This tax is called ER Tax.

The table below shows the earning levels and taxable percentages.

Percentage of Tax         $
Nil                                1710
7.5                                1711 -2563
15                                 2563 - 3418
22.5                              3419 - 4271
27.5                              4272 and above

There are more taxes alongside these detailed and as I learn about them I will update this information.