Brazil has probably the most complex indirect tax regime in the world.  There are various indirect tax regimes, 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 VAT Tax
• ISS (Imposto sobre Serviços), Municipal 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 (*)

(*) Under non cumulative regime.

Brazil is a Federal Republic, and each of the 26 states and the Federal District has their own legislation. This gives rise to 27 regulations on indirect state taxes, meaning varying application, administration and compliance rules in each state.  Brazil is considering reforming this system with the adoption of a 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; and
• Supply of services where the place of supply is Brazil.

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

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.