Brazil

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TAXES - ACCOUNTING

 

 

Corporate tax

Tax rate for resident companies

The tax rate is 15%, completed with an additional tax of 10% on profits exceeding 240,000 BRL. The Social Contribution is another federal tax calculated on net income. This rate is 9% computed on an annual or quarterly basis. Effective tax rate can reach 34% with social contribution and income surtax. Companies can benefit from reductions or exemptions when they are situated in less developed trades-zones.

   
Tax rate on long-term capital gains Capital gains tax rate is the same as corporation tax rate.
   
System governing groups of companies and dividends paid by subsidiaries to their parent companies Dividends paid to residents or non-residents are not subjected to a payment at the source,
   
Tax rate on branches The corporate tax is levied on branches at a rate of 14%.




Income tax

Fiscal year The fiscal year begins on January 1st and ends on December 31st of the same year.
   
Income tax rate The rate is progressive from 0 to 27.5% and shared out into 3 brackets, It applies to monthly incomes,
Lower than 12 696 BRL 0%
12 696 BRL - 25 380 BRL 15%
Beyond 25 380 BRL 27.5%
   
Tax deductions or other allowances There are several types of reductions or of dejections applying in Brazil:
- payments made for educational expenses, up to an annual limit of BRL 2,198.00,
- Brazilian Private Pension Plan contributions, up to 12% of gross income,
- Social Security rates,
- donations, certain school fees, medical expenses etc, (20% maximum of the global annual income).



VAT rates

Standard rates Multiple-rate system with tax levied at State and Federal levels. Brazilian State VAT (ICMS) levied at rates ranging from 7% to 25%, with average rate of 17% (e.g. rate in Sao Paulo is 18%). National VAT (IPI) also levied with average rate of 20%.
   



Other important taxes


Name of tax
Rate
Banking tax, inheritance and gift tax, municipal urban property tax, rural property tax contributions, transaction tax, tax on services, urban real estate transfer tax  
 


 

Accounting

Introduction
The accounting practices in Brazil are inspired by the American model. Indeed, the Brazilian accounting standards are the translation of the "American Institute of Certified Public Accountants ' Statement of Auditing Standards".


Obligations and publications
According to the American model, financial statements must contain at least: a variation table of constant capital out of reserve account and extension account, a table of cash flows, appendices.
Trading companies have to publish annually a balance sheet, a profit and loss account and all information necessary for the understanding of the company's financial health. These documents must be controlled within 60 days preceding the annual meeting of shareholders.

Certification and auditing
The financial statements must be controlled by an independent auditor registered to the "Securities and Exchange Commission" or the "Instituto Brasileiro de Contadores". About half of the audits realized in Brazil are made by international companies of audit.
The current tendency is an increase of the number of the audited companies including those which are not forced to. The qualitative security emanating from a certification represents a not inconsiderable proof for Brazilian companies.

Professionals and representative organizations
The "Conselho Federal de Contabilidade".



Useful links
The tax chapter of the Business in Brazil legal guide published by the NORONHA ADVOGADOS law firm
Ministry of Finance
Federal Revenue and Customs Administration

Last modified in January 2007
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