Consumption/VAT/Sales Tax in Brazil
- Nature of the Tax
- ICMS : Tax on operations concerning the movement of goods and on national, municipal and local transport services.
- Standard Rate
The ICMS is 17%:
transactions: 17% (18% in Sao Paolo);
inter-state transactions: between 7% and 12%;
imports are subject to: between 18% and 25%;
communication services: from 13% to 35%.
- Reduced Tax Rate
- A great number of deductions are applicable, each State being able to alter them.
- Exclusion From Taxation
Several sectors of the economy are exempt from VAT (building, petroleum, gas and mines).
All exports are exempt from VAT and IPI.
- Method of Calculation, Declaration and Settlement
- Standard method of calculation of VAT. Every month, the company pays the ICMS/IPI balance due to the State, equal to the difference between the VAT received on its sales and the VAT paid to its suppliers. An accounts ledger specific to these calculations must be kept. The specific declarations to fill in are available from the authorities.
- Other Consumption Taxes
- A tax on industrialized products (IPI) is also collected: an excise duty levied at the federal level. It applies to almost all sales and transfers of goods manufactured or imported in Brazil. The IPI rate can vary between 0% and 335%. The least taxed products are: basic foodstuffs, and the most taxed: alcohol and cigarettes.
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