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Brazil indirect tax compliance and rates

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.

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.

Indirect tax rates in Brazil

Each of the 26 states and the Federal District set their own indirect tax rates, which range between 17% and 19%. 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%.

Federal VAT or IPI varies according the goods and levy, but can go as high as 300%.  The city Services Tax ISS again have varying rates between 2% and 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.

Brazil VAT rates

RateTypeWhich goods or services
17%StandardStandard state-level VAT or ICMS varies from 17% to 25% depending on the state and the type of goods and services
12%ReducedReduced ICMS rate on inter-state supplies
7%ReducedReduced ICMS rate on designated remote states transactions
2-5% Local Municipal Service Tax ISS 
1.65-7.6% Federal Gross Revenue Tax PIS
0% ICMS rate on e-commerce

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