Brazilian Tax System: Key Taxes and Regulations
1. Import and Export Taxes
What are the functions of import and export taxes?
Import tax primarily serves an extrafiscal function, protecting domestic industry. Export tax is mainly an instrument of economic policy.
What is the taxable event of import tax?
The taxable event is the entry of foreign products into the country. For goods shipped for consumption, it’s the date of registration in customs.
Is import tax subject to the principle of precedence?
No, it can be increased during the financial year due to its extrafiscal function.
2. Taxpayers
Import: The importer or as defined by law.
Export: The exporter or as defined by law.
Urban Property: The property owner.
Automobiles: The vehicle owner.
Services: The company or independent contractor providing the service.
Financial Operations: Any party to the taxable transaction.
Inheritance and Donation: Heir, legatee, donor, or donee.
Rural Property: The property owner.
Real Estate Transfer: Any party in the transaction.
Goods and Services Movement: The legal entity.
Income and Earnings: Individuals or legal entities.
3. Tax Release Types
Import Tax: Joint Declaration.
Urban Property Tax: Direct Office Launch.
Income Tax: Approval.
Vehicle Property Tax: Direct Office Launch.
Services Tax: Approval.
4. Income Tax
Legal Instrument: Statute, Article 6, item XIV, and Article 22, section III.
Function: Primarily fiscal, also redistributes wealth.
Income Definition: Product of business, capital, or their combination.
Presumed Profit vs. Real Profit: Estimated basis for smaller companies vs. actual asset growth.
5. IPI (Industrialized Products Tax)
Function: Extrafiscal, selective based on product essentiality.
Selectivity Example: Higher rates for cigarettes and luxury goods.
6. IOF (Tax on Financial Operations)
Purpose: Monetary policy and revenue collection.
Operations: Credit, exchange, insurance, securities.
7. ITR (Rural Property Tax)
Taxpayer: Property owner.
Immunities: Small rural plots.
8. ITCMD (Tax on Inheritance and Donation)
Taxable Event: Transmission of assets due to death or donation.
Function: Revenue collection for states and Federal District.
Taxpayer: Heir, legatee, donor, or donee.
9. ICMS (Tax on Circulation of Merchandise and Services)
Commodity Definition: Movable goods.
Array Transfer: No ICMS if no ownership change.
Function: Primarily fiscal, known as the State’s collection sheriff.
Municipal Allocation: Portion for electric power supply.
10. IPVA (Tax on Motor Vehicle Ownership)
Taxable Event: Vehicle ownership.
Proof of Ownership: Vehicle licensing.
Exemption: For vehicles adapted for people with disabilities.
11. Property Tax (IPTU)
Progressive Rates: Generally not allowed, except for specific cases.
Difference from ITR: IPTU for urban, ITR for rural properties.
12. ITBI (Tax on Real Estate Transfer)
Taxable Event: Inter vivos real estate transfer.
Rates: Defined by municipal law, e.g., 2% in São Paulo.
13. ISS (Tax on Services)
Municipal Authority: Location where service is provided.
Taxable Event: Service provision.