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VAT Registration in Brazil

VAT Registration in Brazil

VAT in Brazil is composed of three main indirect taxes: the tax on sales and certain services (ICMS), the excise tax and the service tax.

The three taxes are state, federal and municipal and, in addition to these, companies are also subject to other taxes.

VAT registration in Brazil is thus not performed as in other jurisdictions, as companies are subject to these indirect taxes on goods and services in all cases.

The VAT number in Brazil is issued as a tax identification number.

Our agents specializing in company formation in Brazil can assist investors who are interested in knowing more about the indirect taxes applicable to companies.

Read more about the VAT in Brazil below and reach out to our team if you have questions.

We can also assist those who wish to search for a VAT number in Brazil.

Understanding the tax compliance requirements is essential for investors who open a company in Brazil. Our team not only offers complete incorporation services, but we also offer guidance as needed for tax and compliance matters. If you have any other questions about the value-added tax, or the tax filing and payment requirements in the country, please feel free to reach out to us.

What is the VAT on sales and services?

The ICMS is the state VAT that is levied on the import of goods and services, as well as other services offered by Brazilian companies.

The ICMS has rates between 4% and 25%.

Internal ICMS rates vary according to state. In most cases, these can range from 17% to 20%.

The format of the VAT number in Brazil includes 8 digits, composed of a radical and check digits.

What are the other indirect taxes in Brazil?

The excise tax is a federal tax paid by manufacturers, highlighted separately on the invoice. It depends on the type of product and can have a rate of 20%.

The municipal tax is imposed on the supply of services and the import of services (those that are not subject to ICMS). It generally has a rate between 2% and 5%.

The export of services can be exempted from the municipal tax, subject to conditions.

Federal social contributions are also imposed on gross revenue, however, they are not treated as an income tax.

As previously stated, companies have a VAT number in Brazil that is the equivalent of their tax identification.

What are the requirements for VAT reporting?

Companies are expected to submit monthly returns and make monthly payments for the ICMS, the federal excise tax, and the municipal tax.

The calculations for the ICMS tax are to be kept in fiscal books, and properly maintained.

Our team advises companies to work with an accountant in Brazil.

What other taxes do companies need to pay in Brazil?

Apart from the VAT in Brazil, companies are also subject to the following taxes:

  • Corporate income tax rate: 15% standard and 34% including surtax;
  • Dividend withholding tax: 0%; no withholding tax is imposed on dividend distributions paid from retained IFRS profits;
  • Social security contributions: employers contribute 8% to the wages of each employee’s deferred salary account (for the severance fund) and 20% of the wages to the public pension system; in some business sectors, the public pension system contribution was replaced by a temporary contribution;
  • Other taxes: Brazil imposes no payroll tax and no capital duty; there is no stamp duty and no wealth tax.

The import tax is another federal tax that applies to the permanent import of goods in the country. It has variable rates, depending on the product.

Property and transfer taxes apply to real estate transactions and owned property.

Our team specializing in company formation in Brazil and taxation can give you more information about the applicable taxes.

Research and development projects benefit from tax relief, subject to conditions.

Our company formation agents can give you more details on the VAT number in Brazil.

Foreign companies interested in setting up a branch in Brazil can reach out to our team for more information about taxation. The branch is taxed in the same way as the subsidiary, meaning that it will be subject to the same corporate income tax rate, and also to the other applicable taxes. For more information and guidance on the taxation of a permanent establishment in Brazil, please reach out to our team.

Contact our team if you are interested in company formation in Brazil and wish to know more about the local taxes, including VAT in Brazil.