Brazil VAT, ICMS, IPI, GST

There are various indirect tax regimes in Brazil, including but not limited to:

ICMS (Imposto sobre a Circulação de Mercadorias e Prestação de Serviços de Transporte Interestadual e Intermunicipal e de Comunicação), State Sales Tax
IPI (Imposto sobre Produtos Industrializados), Federal Excise Tax
ISS (Imposto sobre Serviços), Services Tax, Municipal Tax (governed by a Federal Law)
COFINS, Social Contribution for Social Security Financing, Federal Tax (*)
PIS, Employees’ Profit Participation Program, Federal Tax (*)

Brazil is a Federative Republic, and each of the 26 states and the Federal District have their own legislation. This gives rise to 27 regulations on indirect state taxes, meaning varying application, administration and compliance rules in each state.

(*) Under non cumulative regime.

Click here if you would like free guidance on Brazilian VAT compliance - including local company formation - from TMF in São Paulo or Rio de Janeiro

Requirement to register for Brazilian VAT

For foreign companies making taxable supplies in Brazil, there may be a statutory obligation to register for indirect taxes. Once registered, non-resident traders must comply with local filing rules (see below).

Typical situations requiring a Brazilian indirect tax registration include:

Where goods are delivered within Brazil;
Where goods are imported into Brazil;
Export of goods from Brazil;
Supply of services where the place of supply is Brazil.

brazil VAT registration threshold

There is no threshold for registration in Brazil. It is compulsory to register in Brazil if taxable supplies are made. .

Non-resident traders operating in Brazil

Unlike Europe and many other parts of the world, it is not possible for foreign businesses to register for indirect taxes in Brazil as a non-resident. In Brazil it is necessary for non-resident traders to form a permanent establishment in order to register for indirect taxes. This can be in the form of either: a joint stock company; a limited liability company; or a branch. There are various requirements and obligations to set up a permanent establishment in Brazil at the Federal, State and Municipal level, depending on the type of establishment.

brazilian indirect tax compliance

There are detailed rules controlling the recording and processing of Brazilian transactions for indirect tax. These include guidelines on:

Invoice requirements, including the requirement for electronic invoicing;
Foreign currency reporting and translation;
Export invoices;
Language requirements;
Credit notes and corrections; and
What accounting records must be maintained and for how long.

indirect tax Rates in brazil

Each of the 26 states and the Federal District set their own indirect tax rates. Some examples of the ICMS standard rate are as follows:

São Paulo, Paraná e Minas Gerais: 18%
Rio de Janeiro: 19%
Remaining States: 17%

Rates of IPI range from 0 to 330%, and average around 15%. ISS standard rate ranges from 2% to 5%.

PIS and & COFINS over sales could be under two regimes:

Cumulative method the rates are: PIS 0,65% and COFINS 3,00%;
Non cumulative the rates are: PIS 1,65% and COFINS 7.6% respectively.

There are many variations to the rates above, including zero rating and exemptions. Please contact us to learn more:
enquiries@tmf-vat.com

Brazilian indirect tax returns

Periodic returns must be submitted by companies registered for indirect taxes in Brazil. In general, filings are monthly.

vat refunds in brazil

There is no function for the refund of VAT to foreign companies if not registered.

How TMF São paulo or rio de janeiro can help in brazil

TMF can help companies in Brazil through the provision of professional services covering company formation, company secretarial, local accounting, and tax compliance services. TMF professionals based in TMF’s Brazilian offices would supply these services.

To learn more about TMF co-ordination or to be put in touch with TMF Brazil, contact us:

Click here if you would like free guidance on Brazilian VAT compliance - including local company formation - from TMF in São Paulo or Rio de Janeiro

Or contact TMF's global VAT & indirect taxes compliance co-ordination team in the UK:
enquiries@tmf-vat.com

+44 (0)870 067 8881