VAT in Brazil guide

Brazil VAT for digital service providers

In order to pay taxes in Brazil, the company should be registered for VAT in Brazil. However, depending on how the transaction is classified, the taxes should be collected by the local customers and/or the agent in Brazil. If this is the case, the foreign company would not be required to be registered in Brazil.

VAT rates

Names of taxes:

• State value-added tax (ICMS);
• Federal value-added tax (IPI);
• Municipal service tax (ISS);
• Federal gross receipt contributions (PIS-PASEP/COFINS);

IPI:

• 0% to 300% (depending on the IPI tariff table classification for the goods)

ICMS:

• 0% to 35% (for supplies in the same state)
• 4%, 7% or 12% (for supplies made to a taxable person in a different state)

ISS:

• 0% to 5% (depending on municipality and nature of service)

PIS-PASEP:

• 0.65% (for taxpayers taxed under the deemed corporate income tax method of calculation, under the cumulative system)
• 1.65% (for taxpayers taxed under the annual actual income tax method, under the noncumulative system)

COFINS:

• 3% (for taxpayers taxed under the deemed corporate income tax method of calculation, under the cumulative system)
• 7.6% (for taxpayers taxed under the annual actual income tax method, under the noncumulative system)

Late – registration penalties

The penalty for late registration for ICMS is a fine, which may vary from 1% to 80% of the value of the transactions that occurred before registration. Penalties also relate to several IPI, PIS-PASEP, COFINS and ISS errors, including failure to register.