BrasilTaxes

Taxes in Brasil

Work In Progress 

See this page for the listing of all the taxes which exist in Brasil: www dot senado dot gov dot br/noticias/jornal/cidadania/impostos/not03.htm

• The information here may be not 100% correct, or it may not work on 100% of the cases. I wrote this according to my experience based on real life situations.

Taxes on product sales

All products sold in Brasil usually have the following taxes applied.

• Federal taxes

II - Import duties , applied in case of an imported product. IPI - Tax on Industrialized products PIS - Social Integration Program tax. COFINS - Contribution for financement of Social Security.

• State taxes

ICMS - It is a equivalent of the VAT in Europe or TAX in USA. But its calculated included in the price. ICMS-ST - This is a tax applied when you sell from state to state.

Taxes on service sales

• Federal taxes

PIS - Social Integration Program tax. COFINS - Contribution for financement of Social Security.

• Municipal taxes

ISS - Tax on services

How it works

Products

Usually a product is classified according to the NCM number, which is a Common number used for tax rates and based of the Harmony System with the first four digits. NCM means Common Nomenclature of MERCOSUL. This number defines the rate of taxes used on a certain product, it defines if it has Import Duties and values for other taxes. You can find the NCM number on the following site:

www4 receita fazenda gob br /simulador

Accessing this site you put in the NCM number the number of yuor product and you will get in return the values of each tax applied to that product.

Example: 
NCM 8431.49.29 - Spare parts for heavy construction machines.
II = 0 %
IPI = 5 %
PIS = 2,10 %
COFINS = 15,37 %

The calculation will be based on a USD.100,00 value. The base of all the imported products is the value of the product + the freight cost up to the Brasilian port. We will suppose that the above mentioned value have already the freight included and it is CIF destination port.

USD / BRL ratio as of writing is 1 USD = 3,8336 BRL which gives us the following values:

USD 100 = BRL 383,36 as base.
II = 0 % = 0,00 BRL
IPI = 5 % = 19,17 BRL
PIS = 2,10 % =  8,05 BRL
COFINS = 15,37 % = 58,92 BRL

It gives us a total of federal taxes of BRL 86,14 , which have to be summed to the BRL 383,36.

State taxes are applied over the base value with the federal taxes. This results in a BRL 469,50 as base, on which we have to apply the 17% of ICMS tax for the Bahia state.

BRL 469,50 x 17% = BRL 79,815 

This gives us a total of BRL 549,315 as a total of the product.