1. Tax system and system



There are 58 kinds of tax in Brazil, which can be divided into federal tax, state tax and municipal tax according to administration. Among them, the federal tax includes income tax, industrial product tax, import tax, export tax, financial operation tax, temporary financial circulation tax, rural land tax, etc. State taxes include commodity circulation tax, vehicle tax, estate and gift tax, etc. Municipal taxes include social services tax, urban real estate tax, real estate transfer tax, etc. In addition, the enterprise pays all sorts of social expenses even, include fund of fund of fund of insurance of social insurance, length of service specifically, social integration plan expends, social security expends etc. The Brazilian government collects and manages taxes at different levels.







2. Main taxes and tax rates



[Federal tax]



(1) Income tax (Imposto DE Renda). Divide enterprise income tax, individual income tax and source income tax 3 kinds.



Enterprise income tax (IRpj-Imposto DE Renda das Pessoas juridicas) : it is collected in four times every year. The deadline is March 31, June 30, September 30 and December 31 respectively. When the adjusted taxable income of enterprise income tax is less than 240,000 reais, the tax rate is 15%; An additional 10 per cent will be levied on the excess of R $240,000.



Personal income tax (IRPF-imposto DE Renda das Pessoas Fisicas) : the monthly income of less than R $1,058 is exempt from income tax; Monthly income between R $1,058.01 and R $2,115, tax rate 15%; Monthly income above r $2,115, tax rate 27.5 percent. Any profitable business activity, such as buying and selling houses, land, assets or interest income, shall be subject to income tax on commercial invoices or bank interest payments. In accordance with decree No. 73 of the Competent Tax authorities of Brazil of 23 July 1998, aliens with the right of abode shall pay income tax in accordance with the foregoing individual income tax rates on the aggregate amount of their income in Brazil and abroad; Aliens with no right of abode shall, within 12 months of their entry into Brazil, withhold 15 per cent of their income in Brazil; If he/she has stayed in Brazil for more than 183 days during the aforesaid period, he/she shall, from the 13th month onwards, pay income tax at the aforesaid individual income tax rate on the total amount of his/her income in Brazil and abroad; If he obtains the right of abode within 12 months, he shall, from the next day after the acquisition, pay income tax at the said individual income tax rate on the total amount of his income in Brazil and abroad. This restriction does not apply to those who have a double taxation avoidance agreement with Brazil.



Irrf-imposto DE Renda Retido na Fonte (IRRF-imposto DE Renda Retido na Fonte) : tax collected on labor profits, income from financial transactions, repatriation of interest and commissions, income from advertising, lottery profits, etc. The tax rate and crediting basis are different.



The Brazilian government inspects income taxes every year, so companies or individuals must keep their tax receipts for five years.



(2) IPI-imposto DE Produtos Industrializados: tax rates range from 0 to 55 percent, with an average tax rate of about 16 percent. This tax is paid by the industrial production enterprises and, in the case of imported goods, by the importer at customs clearance. Raw materials, semi-finished products and packaging materials that have already paid the tax on industrial products are used as tax credits. Taxes on industrial products are progressive.



(3) Import tax (II-IMposto da Importaca O) : The import tax rate is different according to different goods. The average tax rate is now 17 per cent. Low or zero rates for general raw materials, such as 5 per cent for refractory materials and 5 per cent for capital products; General consumer goods for 20~30% or so.



(4) Export tax (IE-imposto da Exportacao) : In order to encourage exports, the scope of export tax is very narrow.



(5) Financial operation tax (IF-imposto DE Operacao Financeira) : the tax rate is 2%. The tax is levied on foreign exchange purchases, bank credits, insurance, securities transactions, etc.



Cpmf-contribuicao DE Propriedade Provisoria Sobre Movimentacao Financeira: Chargeable for three years starting from June 17, 1999. The tax rate is 0.38%.



(7) ITr-Imposto DE Propriedade Moorialrural: The tax rate is between 0.03% and 20% according to the area and use of the land. For example, for more than 5,000 hectares of land, the use of more than 80% of the tax rate is 0.45%; If the degree of use is less than 30%, the tax rate is 20%.



(8) Financial Operation tax (IF-IMposto sobre Operacoes Financeiras) : The businesses that may be related to IOF in the event of capital inflow include: I) foreign exchange collection under the export of goods or services; Ii) The settlement of foreign exchange from overseas for investment fund funds; Iii) Purchases of foreign exchange by institutions authorized to trade in the foreign exchange market; Iv) Foreign exchange settlement of foreign investors' remittances from abroad, including through similar operations and investments in financial and capital markets in a manner prescribed by the National Monetary Commission -CMN. The business related to IOF in capital outflow includes: I) foreign exchange payment business under service import; Ii) The foreign exchange business involved in the fulfillment of the cardholder's obligations as a credit card issuer by overseas purchasers, credit card administrations, commercial Banks or comprehensive Banks; Iii) foreign exchange purchase business of remitting overseas funds for investment funds; Iv) Payment for imported goods; V) Purchase of foreign exchange for outward remittance by foreign investors, including, through similar operations, investment in financial markets and capital markets in a manner prescribed by the National Monetary Commission -CMN.



From December 1997 to March 1999, the IOF was taxed at 2% of the amount of foreign exchange. Increased to 2.5% from March 17, 1999. Starting in February 2000, the rate was reduced again to 2 percent, and eight years later, on January 1, 2008, it was raised again to 2.38 percent. Between 2008 and 2009, the tax on foreign exchange sales and sales by foreign investors into or out of Brazil's financial or capital markets was reduced to 0 per cent, according to the Decree 6.613/2008, which changes the Decree 6.306/2007. In addition, authorized institutions that sign contracts to sell foreign exchange at the same time they purchase foreign exchange or obtain foreign loans will see their tax rate cut to 0%. This mirrors the period when Brazil was most affected by the financial crisis. The world financial crisis caused a large outflow of capital in many emerging economies, followed by a large inflow of money into Brazil. The Brazilian government responded to the crisis by adjusting the IOF's approach. According to the latest decree issued on April 7, 2011, the tax on foreign investment in Brazilian finance and capital markets, when they remit money into or out of Brazil, has been raised to 6%.







[State Tax]



(1) Commodity Circulation Service Tax (ICMS-Lmposto DE Circulacao DE Mercadorias e Servicos, equivalent to VALUE-ADDED tax) is a progressive tax. Based on the total amount of commercial invoices, there are two tax rates, 17% and 18%, and 18% for the Canton of Sao Paulo. (This means that transactions within the state are subject to tax reduction under an agreement with the state, if they are sold from the state to other Brazilian states, such as Brasilia and the northern states, only 7%.) If sold to the south - central states, only 12%. The same is true in other states), at 17 per cent in all other states. Taxes are paid to the state department of Finance, of which only 75% belong to the state department of finance and the remaining 25% to the municipal department of Finance.



Exports are exempted from the tax. However, if it is an imported commodity, part of it will be withheld first when it is imported (10% withheld by Sao Paulo state, 5% withheld by northeast states), but it is allowed to be deducted when this tax is paid after the sale of the importer's goods (some states allow imported products to be paid within 60 days after the sale).



(2) Vehicle tax: ipva-Imposto DE Propriedade DE Veiculos Automotores



(3) Inheritance and gift tax (itd-imposto DE Transmissco Causa Mortis e Doacao).







[Municipal Tax]



(1) Social service tax (ISSS-IMposto Servico Social) : 1.5% of the income payable, such as processing fee, maintenance fee and labor fee, etc. for processing on behalf of customers.



Iptu-imposto DE Propriedade Predial eTerritorial Urbana: It can be paid in a lump sum or by installments according to the building area, area and value.



(3) Real estate transfer tax (itbi-imposto do Transmissao DE Bens Imoveis) : the tax rates range from 2 to 6 percent.







Contributory Social



Csll-contribuicao Social Sobre o Lucro das Pessoas: Tax calculated on the basis of the turnover of the company or of the actual profits. For enterprises based on turnover, the tax rate is between 1.08% and 2.88%. 1.08 per cent for industry and commerce; Service industry 2.88%. For businesses that are taxed on their profits, the rate is 9 per cent.



(2) Social Insurance contributions (INSS-CONTRIBUicAO Para a Seguridade Social, sometimes known as CINSS) :



Depending on the number of employees, the tax rate ranges from 26.8% to 28.8% and is deposited with the Federal Reserve Bank of Brazil.



(3) FgS-Fundo DE Garantia do Tempo deServio (similar to age allowance) enterprises shall pay 8% of their gross salary every month and deposit it in the Federal Reserve Bank of Brazil.



(4) For a PIS program Do Integracao Social, the tax rate shall be 0.65% if the tax is calculated on the basis of the company's turnover or actual profit. For profit-based enterprises, the tax rate is 1.65 percent.



(5) Social Security fee (CNnfin-Financiamento da SeguridadeSocial) : The tax rate is 0.75% for companies that are taxed on turnover based on the amount of the company's turnover or actual profits; For enterprises that are taxed on their profits, the tax rate is 3%.



(6) CSP-CONTRIBUicao Sindical Patronal: Based on the amount of capital reported by the member company, at a rate ranging from 0.02% to 0.8%.



Among the above taxes, the main investment-related taxes are enterprise income tax, individual income tax, industrial product tax, commodity circulation service tax, temporary financial circulation tax, corporate profit donation, social security fee, social integration planning fee, social insurance premium and labor union fee.







Table 3-1: Brazil's investment-related taxes



1. Tax system and system



There are 58 kinds of tax in Brazil, which can be divided into federal tax, state tax and municipal tax according to administration. Among them, the federal tax includes income tax, industrial product tax, import tax, export tax, financial operation tax, temporary financial circulation tax, rural land tax, etc. State taxes include commodity circulation tax, vehicle tax, estate and gift tax, etc. Municipal taxes include social services tax, urban real estate tax, real estate transfer tax, etc. In addition, the enterprise pays all sorts of social expenses even, include fund of fund of fund of insurance of social insurance, length of service specifically, social integration plan expends, social security expends etc. The Brazilian government collects and manages taxes at different levels.







2. Main taxes and tax rates



[Federal tax]



(1) Income tax (Imposto DE Renda). Divide enterprise income tax, individual income tax and source income tax 3 kinds.



Enterprise income tax (IRpj-Imposto DE Renda das Pessoas juridicas) : it is collected in four times every year. The deadline is March 31, June 30, September 30 and December 31 respectively. When the adjusted taxable income of enterprise income tax is less than 240,000 reais, the tax rate is 15%; An additional 10 per cent will be levied on the excess of R $240,000.



Personal income tax (IRPF-imposto DE Renda das Pessoas Fisicas) : the monthly income of less than R $1,058 is exempt from income tax; Monthly income between R $1,058.01 and R $2,115, tax rate 15%; Monthly income above r $2,115, tax rate 27.5 percent. Any profitable business activity, such as buying and selling houses, land, assets or interest income, shall be subject to income tax on commercial invoices or bank interest payments. In accordance with decree No. 73 of the Competent Tax authorities of Brazil of 23 July 1998, aliens with the right of abode shall pay income tax in accordance with the foregoing individual income tax rates on the aggregate amount of their income in Brazil and abroad; Aliens with no right of abode shall, within 12 months of their entry into Brazil, withhold 15 per cent of their income in Brazil; If he/she has stayed in Brazil for more than 183 days during the aforesaid period, he/she shall, from the 13th month onwards, pay income tax at the aforesaid individual income tax rate on the total amount of his/her income in Brazil and abroad; If he obtains the right of abode within 12 months, he shall, from the next day after the acquisition, pay income tax at the said individual income tax rate on the total amount of his income in Brazil and abroad. This restriction does not apply to those who have a double taxation avoidance agreement with Brazil.



Irrf-imposto DE Renda Retido na Fonte (IRRF-imposto DE Renda Retido na Fonte) : tax collected on labor profits, income from financial transactions, repatriation of interest and commissions, income from advertising, lottery profits, etc. The tax rate and crediting basis are different.



The Brazilian government inspects income taxes every year, so companies or individuals must keep their tax receipts for five years.



(2) IpI-imposto DE Produtos Industrializados: