Brazil VAT/IPI exclusive of discounts

Brazil is to follow common Value Indirect Tax practise and exclude unconditionsl discounts from the calculation of indirect tax on manufacturing, Impostos sobre Produtos Industrializados (IPI).

Brazilian IPI rates vary from 0% to over 300%, depending on the products.

The Supreme Court of Brazil this month concluded that the Brazilian VAT / IPI calculation should exclude discounts, and not be based on the retail price. This follows EU VAT Directive law, and the common practice in the rest of the world where VAT or Goods & Services Tax are operated.

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