how foreign investors can adapt to brazilian systems: overview of taxation, technology and labor

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LEGISLATION税收法

How foreign investors can adapt to Brazilian systems:

overview of taxation, technology and labor


Brazilian Tax System

• Federal taxes

• State´s taxes

• City´s taxes



Wealth levied by taxes:

Ownership:

a) real state: farm lands and residential real state

b) automobile ownership



Wealth levied by taxes:Income:

• Federal income tax: 15% or 25% on corporation´s profits;

• Federal income tax on individuals: 7,5% to 27,5% of worker´s revenues

• Social contribution on profits: 9% on corporation´s profits


Brazilian Tax System Wealth levied by taxes:

Consumption:

• Federal social contributions (PIS/COFINS): 3,65% or 9,25% (added value system) on sales and services

• Federal added value taxes on manufactured produts sales (IPI)

• State added value tax (ICMS): various rates on sales of goods, comunication and transport

• City´s tax on services: 2% to 5% rate on a list of 255 diferent types of services

• Specific contributions on gasoline and other oil products




Payroll taxes:

• Social contributions on worker´s salary: 34,8% to 36,8% on every payment done to employees, except non-remuneration payments, and 20% to other non-employee workers




Imports:

• Import tax

• Manufactured products tax (IPI)

• Social contributions on imports

• State tax



Small and Middle Size Companies pay most of the taxes by way of a unified tax system levied on their revenues


Brazilian Tax System – Major tax issues concerning for foreign investors

a) Complexity of the system:

• Tax conflits between diferent tax authorities: even if the Brazilian Constitution prohibit double taxation over the same wealth – property, income or consumption, an operation can be charged by two diferent tax authorities

• Many forms and subsidiary duties to be complied with




• Tax conflits between diferent tax authorities: even if the Brazilian Constitution prohibit double taxation over the same wealth – property, income or consumption, an operation can be charged by two or more diferent tax authorities: companies may need judicial resolution




• Many forms and accessory duties to be fullfild

• Eletronic invoice and other information provided by companies to Federal government: the necessary assistance of an accountant office with wide experience on providing these informations



b) Cumulation on taxes over consumption:

• IPI, State´s value added tax (ICMS), social contributions on sales (PIS/COFINS)

• Restrictions on credits of non-cumulative taxes



c) Higher taxation on worker´s remuneration:

• The recent federal govern attempt to reduce the tax burden over labour



d) Transfer pricing rules

e) Non-regular state´s tax benefits



f) Payment or credit to investors located in HK

g) Taxation on income paid or credited to taxpayers in Mainland China



h) Acquisition of capital goods: tax credits

i) Income tax exemption on profit payments

j) Loan and Currency Exchange tax on loans and credits received from abroad


THANK YOU

• Ph.D and Master Degree in Tax Law

Senior Partner at

how foreign investors can adapt to brazilian systems: overview of taxation, technology and labor

Economy & Finance