Global

Details

  • Service: Tax, International Corporate Tax, Global Indirect Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 3/19/2013

Brazil - Businesses face multiple tax regimes, tax rates 

March 19:   Brazil’s tax system is viewed as being notoriously difficult, and according to a World Economic Forum report, tax regulations are a major challenge for entities doing business in the country, with tax rates and inefficient government bureaucracy also ranking among the top five issues.

Each of Brazil’s federal, state, and municipal governments has constitutional authority to levy certain types of taxes, which has resulted in a bewildering range of direct and indirect taxes.


Between 1998 and 2012, Brazil’s three levels of government issued more than 300,000 tax rules, with complex wording and little effort to harmonize rules underlying similar regimes. For example, Brazil’s 27 states share the same general state value added tax (ICMS) framework, but each state has the ability to set its own tax rates, exemptions, and base adjustments. With about 5,000 municipalities having their own services taxes, there are about 5,000 variations of the tax as a result.


For businesses, this means the same taxable event can give rise to multiple taxation. Depending on the jurisdiction, sales of goods can attract up to four value added taxes, and imported goods could attract up to five different customs and indirect tax charges. Indirect tax obligations can also arise on transferring goods from state to state.


Read a February 2013 report of a conversation with a KPMG tax professionals in Brazil: Tax Disputes and Controversy Update – Focus on Brazil



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