Corporate Tax in Brazil

Overview by
Tax Base For Resident and Foreign Companies
Companies resident in Brazil pay taxes on their worldwide profits. Foreign companies are only subject to tax if they engage in certain sales operations involving companies or agents resident in Brazil.

Tax Rate

Corporate tax rate 15%. Companies can benefit from reductions or exemptions when they are located in under-developed geographical areas (zonas francas).
Supplementary tax on profits over 240 000 BRL 10%
Social contribution (CSL) 9% plus 10% on profits over USD 110,000.
Tax Rate For Foreign Companies
Foreign and resident companies are liable for tax.
Capital Gains Taxation
The tax rate on long term capital gains is the same as for corporate tax. Non-resident investors are subject to an obligatory deduction of 15%, rising to 25% for residents of tax havens.
Main Allowable Deductions and Tax Credit
All the expenses necessary for company activity are deductible. Other expenses can be added: for employees' lunches, training, investment in the north-east of the country or in IT equipment. On the other hand, only 20% of managers' salaries are considered to be deductible expenses.
Other Corporate Taxes
There are many indirect taxes:
- The PIS and COFINS, respectively allocated to an employee savings scheme and to reimbursement of social security, and levied on the gross income of the company (1.65% and 7.6%). Exports are exempt, but imports are liable.
- A supplementary tax, the ISS, is deducted by municipalities on services which are not subject to the ICMS, and is about 2 to 5% of the price of the service billed.
- A Financial Transactions Tax (IOF) to a 4% rate.
- Concerning real estate, a property tax which varies from 0.3 to 1% of the value of the property is deducted every year by the municipality, as well as a second tax of 0.03 to 20% on rural property, according to the States and the use of the land. Every buyer must pay a progressive tax of 2 to 6% on the price of the property. This federal value added tax is levied on nearly all sales and transfers of products manufactured in or imported into Brazil, depending on the degree of necessity.
- In addition, import companies pay an import duty which varies according to the type of goods, and companies which pay royalties or pay for services rendered by foreign companies are subject to a deduction of 10%.

Country Comparison For Corporate Taxation

  Brazil Latin America & Caribbean United States Germany
Number of Payments of Taxes per Year 10.0 33.2 11.0 16.0
Time Taken For Administrative Formalities (Hours) 3.0 384.7 187.0 215.0
Total Share of Taxes (% of Profit) 69.0 48.0 46.8 48.2

Source: Doing Business

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

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