In Brazil, the major tax guidelines are defined by the Federal Constitution, which sets down general principles, the limits of taxing authority, jurisdictions and the question of sharing of tax revenues.
Consequently, our National Tax System was instituted by the Constitution itself, which determines that the Union, States, Federal District and Municipalities can institute taxes, considering the power to tax as one of the inherent qualities of the State. Political-administrative autonomy, considered an essential characteristic of our federative system, grants each level of government the right to institute taxes, fees (corresponding to utilization of public services and police power) and contributions targeted at improvements (resulting from public works).
According to the 1988 Constitution (with the alterations introduced by Constitutional Amendment no. 3, dated 03/17/93), the taxes under the specific jurisdiction of the Union, States and Federal District and Municipalities are as follows, classified by their nature:
| TAXES |
JURISDICTION |
| Foreign Trade Taxes | |
| - Import Tax – II |
Union |
| - Export Tax - IE |
Union |
| Taxes on Assets and Income | |
| - Income Tax - IR |
Union |
|
Rural Land Tax - ITR |
Union |
|
- Tax on Automotive Vehicles - IPVA |
States |
|
- Tax on Property Transmission Causa Mortis – ITCD |
States |
|
- Urban Building and Land Tax – IPTU |
Municipalities |
|
- Transmission Tax Inter Vivos - ITBI |
Municipalities |
| Taxes on Production and Circulation: | |
|
- Industrialized Products Tax - IPI |
Union |
|
- Tax on Credit Operations, Exchange and Insurance – IOF |
Union |
|
- Tax on the Circulation of Merchandise and Interstate and Intermunicipal Transportation Services and Communications – ICMS |
States |
|
- Tax on Services of Any Nature - ISS |
Municipalities |
Aside from the taxes listed above, the Federal Constitution reserves exclusive authority to the Union to institute social contributions, contributions on intervention in the economic domain and those of interest to professional or economic categories. In the case of social contributions, one should stress that the States, Federal District and Municipalities may levy contributions on their civil servants in order to cover the costs of their Social Security and social assistance systems targeted to those workers.
Among social contributions, the following deserve mention:
|
Tax Table – 200 |
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| Tax (Acronym) | Income Tax |
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| IRDF | IRPJ | IRF | |||
| Labor |
Capital |
Outros |
|||
| Type / Nature |
Income |
Income |
Income |
Income |
Income |
|
Calculation Base |
Wages and earnings |
Profits |
Wages and earnings |
Difference between purchase and sale value |
Awards and lotteries; earnings on profissional services |
|
Subject Liable |
Individuals |
Corporate entities |
Individuals |
Individuals or corporate entities |
Individuals or corporate entities |
|
Rates |
Zero, 15% to 27.5% |
15% and 25% |
15% and 27.5% |
10%, 15% and 20% |
30% and 1.5% |
|
Taxing Authority |
Union |
Union |
Union |
Union |
Union |
|
Tax Table – 2007 |
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|
Tax (Acronym) |
COFINS |
PIS |
PASEP |
IPI |
FGTS |
|
Type / Nature |
Production |
Produção |
Produção |
Produção |
Produção |
|
Calculation base |
Gross Revenues (including financial) |
Gross Revenues (including financial) |
Gross revenues |
Industrialized products sold (aggregate value) |
Payroll |
|
Subject Liable |
Corporate entity |
Corporate entity |
Corporate entity governed by public law |
Corporate entity |
Corporate entity: or individual (domestic employer doméstico) |
|
Rates |
3% 7.6 |
0.65% 1.65 |
1% |
From 0% to 365.63%, according to TIPI |
8% |
|
Taxing Authority |
Union |
Union |
Union |
Union |
Union |
|
Tax Table – 2007 |
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|
Taxes (acronym) |
CSLL |
ITR |
IE |
II |
CPMF |
|
Type / Nature |
Income |
Assets |
Production |
Production / Consumption |
Production / Consumption |
|
Calculation Base |
profits |
Value of rural real estate |
Value of exported product or service |
Value of imported product or service |
Debited to bank accounts |
|
Subject Liable |
Corporate entity |
Individual or corporate entity |
Corporate entity |
Individual or corporate entity |
Individual or corporate entity |
|
Rates |
8% |
0.03% to 20% |
from 0% to 150% |
from 0% to 35%, according to the TEC |
0.38% |
|
Taxing Authority |
Union |
Union |
Union |
Union |
Union |
|
Tax Table – 2007 |
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|
Tax (Acronym) |
Contribution to Social Security (INSS) |
Contribution to Civil Service Social Security |
|||
|
Self-employed |
Employee |
Employer |
Union |
States and Municipalities |
|
|
Type / Nature |
Income |
Income |
Production |
Income |
Income |
|
Calculation Base |
Earnings |
Wages |
Payroll |
Earnings |
Earnings |
|
Subject Liable |
Individual |
Individual |
Corporate entity; or individual (domestic employer) |
individual (federal civil servant) |
Individual (state or municipal civil servant) |
|
Rates |
20% |
from 8% to 11% |
15%, 17.5%, 20% and 22.5%; or 12% (empr. dom.) |
11% |
Varies by State or Municipality |
|
Taxing capital Authority |
Union |
Union |
Union |
Union |
States and Municipalities |
|
Tax Table – 2007 |
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| Tax (Acronym) |
ICMS |
IPVA |
ITCD |
ISS |
IPTU |
ITBI |
|
Type / Nature |
Production / Consumption |
Assets |
Assets |
Production / Consumption |
Patrimônio |
Patrimônio |
|
Generating Fact |
Circulation of merchandise |
Proprietor- ship |
Donations or transmission of properties – causa mortis |
Services rendered |
Proprietorship or possession |
Donations or transmission of goods – inter vivos |
|
Calculation Base |
Value of Merchandise and Services Sold (aggregate value) |
Value of automotive vehicle |
Value of good, movable or not, donated or transmitted |
Value of the Service Rendered |
Value of Urban Real Estate |
Value of Real Estate Sold |
|
Subject Liable |
Corporate Entity |
Individual or corporate entity |
Individual |
Corporate entity; or individual (self-employed service provider) |
Individual or corporate entity |
Individual or corporate entity |
| Rates* |
4%, 7%, 12%, 17%,18%, 21% and 25% (levied within price) |
from 1% to 4% |
4% |
from 0.5% to 10% |
from 0.3% to 3% |
2% |
|
Taxing Authority |
States |
States |
States |
Municipalities |
Municipalities |
Municipalities |
|
* The rates of those taxes for which States and Municipalities are responsible are based on those in effect in the Federal District (which includes Brasilia, the Capital of Brazil). |
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