Brazil indirect tax compliance and rates

There are detailed rules controlling the recording and processing of Brazilian transactions for indirect tax. These include guidelines on:

• Invoice requirements, including the requirement for electronic invoicing;
• Foreign currency reporting and translation;
• Export invoices;
• Language requirements;
• Credit notes and corrections; and
• What accounting records must be maintained and for how long.

Periodic returns must be submitted by companies registered for indirect taxes in Brazil. In general, filings are monthly.

There is no function for the refund of VAT to foreign companies if not registered.

Each of the 26 states and the Federal District set their own indirect tax rates, which range between 17% and 19%. Some examples of the ICMS standard rate are as follows:

• São Paulo, Paraná e Minas Gerais: 18%
• Rio de Janeiro: 19%
• Remaining States: 17%
• Rates of IPI range from 0 to 330%, and average around 15%. ISS standard rate ranges from 2% to 5%.

Federal VAT or IPI varies according the goods and levy, but can go as high as 300%. The city Services Tax ISS again have varying rates between 2% and 5%.

PIS and & COFINS over sales could be under two regimes:

• Cumulative method the rates are: PIS 0,65% and COFINS 3,00%;
• Non cumulative the rates are: PIS 1,65% and COFINS 7.6% respectively.

There are many variations to the rates above, including zero rating and exemptions.