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8/2/2019 Brazil 2011 Vat Gst
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GLOBAL INDIRECT TAX
BrazilCountry VAT/GST Essentials
kpmg.com
TAX
http://users/evs_user/Library/Caches/Adobe%20InDesign/Version%207.0/en_GB/InDesign%20ClipboardScrap1.pdfhttp://users/evs_user/Library/Caches/Adobe%20InDesign/Version%207.0/en_GB/InDesign%20ClipboardScrap1.pdf8/2/2019 Brazil 2011 Vat Gst
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b | Brazil: Country VAT/GST Essentials
2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member rms o the KPMG network o independent rms are aliated with KPMG International. KPMG International provides no client services. All rights reserved.
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Brazil:Country VAT/GST Essentials
Contents
Scope and Rates 2
What supplies are liable to VAT? 2
What is the standard rate o VAT? 2
Are there any reduced rates, zero rates, or exemptions? 3
Registration 4
Who is required to register or Brazilian VAT? 4
Are there penalties or not registering or
late registration? 4
Are there any simplications that could avoid the
need or an overseas company to register or VAT? 4
VAT Grouping 5
Is VAT grouping possible? 5
Can an overseas company be included in a VAT group? 5
Returns 5
How requently are VAT returns submitted? 5
Are there any other returns that need to be submitted? 5
VAT Recovery 6
Can I recover VAT i I am not registered? 6
Does your country apply reciprocity rules or reclaims
submitted by non-established businesses? 6
Are there any items that you cannot recover VAT on? 6International Supplies o Goods and Services 7
How are exports o goods and services treated? 7
How are goods dealt with on importation? 7
How are services which are brought
in rom abroad treated or VAT purposes? 7
Invoices 7
What do I have to show on a tax invoice? 7
Can I issue invoices electronically? 10
Is it possible to operate sel-billing? 10
Transers o Business 11
Is there a relie rom VAT or the sale o a
business as a going concern? 11
Options to Tax 11
Are there any options to tax transactions? 11
Head Ofce and Branch Transactions 11
How are transactions between head oceand branch treated? 11
Bad Debt 12
Am I able to claim relie or bad debts? 12
Anti-Avoidance 12
Is there a general anti-avoidance provision
under VAT law? 12
Penalty Regime 13
What is the penalty and interest regime like? 13
All inormation refected in this document was obtained/summarized rom KPMG in Brazil as o October 2011.
2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member rms o the KPMG network o independent rms are aliated with KPMG International. KPMG International provides no client services. All rights reserved.
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2 | Brazil: Country VAT/GST Essentials
Scope and Rates
What supplies are liable to VAT?
There are two value-added taxes in Brazil. One is a state
sales tax (Imposto sobre Circulao de Mercadorias e
Servios [ICMS]) and the other is a ederal excise tax
(Imposto sobre Produtos industrializados [IPI]).
ICMS is due on the physical movement o merchandise.
The ICMS is also levied on inter-state and inter-municipal
transport services, communications and electricity.
IPI excise tax is due, with a ew exceptions, on all goodsimported or manuactured in Brazil.
The tax is paid upon import or on the manuacture o a
product. Credit is given with respect to the IPI tax paid on
the raw materials or component parts used in the nished
product or consumed in production. The dierence in IPI
must also be paid i the goods or products are:
imported and sold at a higher price by the importer to a
domestic purchaser;
repackaged or sale at a higher price;
sold at a higher price by the producer or manuacturerthrough a branch; or
sold through exclusive distributors, a joint venture, or
through an aliated concern.
Furthermore, there are other taxes that are due on supply
o goods or services: services tax (Imposto Sobre Servios
[ISS]), Social Contribution on Billing (Contribuio para
o Financiamento da Seguridade Social [COFINS]) and
Contribution to the Social Integration Programme (Programa
de Integrao Social [PIS]).
ISS is a municipal tax on gross billings or services.
Services subject to the ISS are dened by ederal law. Eachmunicipality (city) must have its own list o taxed services.
The COFINS is described as a social contribution and is
targeted or unding o social welare programs. The COFINS
is charged on gross receipts rom supply o goods and
services.
The PIS was created to und the unemployment insurance
program. The COFINS is charged on gross receipts rom
supply o goods and services.
What is the standard rate o VAT?
The standard rates o VAT are:
ICMS
The standard rate o ICMS is 17 percent. However, in
So Paulo, Minas Gerais and Paran the standard rate is
18 percent and Rio de Janeiro is 19 percent. On inter-state
movements o goods, the rate applied may vary based
on the state o destination.
IPI
The tax is normally charged on an ad valorem rate
according to the classication o the product based upon
the international Harmonized Commodity Description and
Coding System (HS), administered by the World Customs
Organization in Brussels. Rates range rom zero to a
maximum o 330 percent and average about 10 percent.
Luxury goods are at the high end o the tax scale.
ISS
The standard rate o ISS is 5 percent, although there are
lower rates or specic services. However, rates may varyrom one municipality to another.
PIS and COFINS
The standard rates o PIS and COFINS are 1.65 percent and
7.6 percent, respectively.
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Brazil: Country VAT/GST Essentials | 3
Are there any reduced rates, zero rates, or exemptions?
Yes.
ICMS Tax on the circulation o goods and transportation
and communication services
There is a lower, 12 percent ICMS rate levied on some
specic goods and services, including:
arm implements and tractors, machines, industrial
devices and equipment and products rom the electronic
data processing industry, which have been granted some
incentives
diesel oil and hydrated ethyl alcohol uel
motor vehicles
sand and stones
ood products
transport services.
There is a lower, 7 percent ICMS rate levied on some
specic goods and services, including:
products that are part o the basic ood basket
products rom the electronic data processing industry.
There is an extensive list o exemptions, including:
exporting
books, newspapers, periodicals, and the paper
consumed in the printing o such products
sale o xed assets
ruits, vegetables, and arm/garden produce
preservatives.
IPI Tax on Industrialized Products
There is an extensive list o products which are tax exempt
or on which the tax rate is zero, including:
live animals and animal products
plant products
animal and plant at or oil
chemical products
textile products
shoes.
There is a list o exemptions, which includes:
ree samples, with no commercial value
vessels, except sporting or pleasure boats
exports
books, newspapers, periodicals, and paper consumed in
the printing o such products
electric energy, petroleum products, uel and minerals
belonging to the country
gold, when seen as a liquid asset.
ISS Tax on Services
The ollowing services are exempt rom ISS:
service exports
services rendered through an employment relationship,
reelances, directors and members o the advisory or
scal boards o partnerships and oundations, as well as
managing partners and delegate managers
amounts intermediated in the bonds and securitiesmarket, the amount o bank deposits, the capital,
interests and deault interests regarding credit
operations perormed by nancial institutions.
2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member rms o the KPMG network o independent rms are aliated with KPMG International. KPMG International provides no client services. All rights reserved.
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4 | Brazil: Country VAT/GST Essentials
PIS (Social Integration Tax) and COFINS (Social
Contribution Tax)
There is a lower rate o 0.65 percent or PIS and 3 percent
or COFINS ICMS or specic goods and services, including:
telecommunication services
passenger transportation services by road, underground,
railway or water
air passenger transportation services rendered by
companies licensed to operate on domestic fights and
those resulting rom the rendering o air passenger
transportation services by air taxi companies
services related to early childhood, elementary,
secondary, and college education
sale o used cars.
There is a list o exemptions which includes:
exportation o goods
exportation o services with payment in convertible
currency
sales o products to a commercial export company or
export purpose specically
sales o xed assets.
Registration
Who is required to register or Brazilian VAT?
Brazilian Entities
I a business makes supplies o goods and services that
are subject to IPI, ICMS, ISS, PIS, or COFINS in Brazil,
registration is compulsory. There is no threshold below which
a business is not required to account or these taxes.
Businesses are required to separately register or ICMS
in each state and ISS in each city where it has any kind o
establishment.
Non-Brazilian Entities
Foreign businesses are able to register or IPI, ICMS,
ISS, PIS, and COFINS only i they have a permanent
establishment in Brazil and they perorm taxable transactions
in the country. This will most likely give rise to corporate
income and other local tax liabilities in Brazil.
Are there penalties or not registering or late
registration?
ICMS
The penalty or ailure to register a scal document, provided
the operation has been perormed in a legal manner and
the tax duly withheld is BRL119.04 per month o operation,
without prejudice to all other applicable penalties.
ISS
The penalty or ailure to register or the ISS is BRL750 in
So Paulo city. The penalty may vary rom one municipality to
another.
Are there any simplifcations that could avoid the needor an overseas company to register or VAT?
Foreign companies that operate in Brazil are subject to the
same legal requirements that the domestic companies are,
assuming that they have established a permanent business
in the country.
2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member rms o the KPMG network o independent rms are aliated with KPMG International. KPMG International provides no client services. All rights reserved.
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Brazil: Country VAT/GST Essentials | 5
VAT Grouping
Is VAT grouping possible?
VAT grouping is possible only or the purposes o calculating
and withholding contributions or PIS/COFINS.
Regarding ICMS, IPI, and ISS, it is not possible to have VAT
grouping in cases o distinct companies or corporate entities.
Each establishment (belonging to the same company)
must calculate and withhold the above-mentioned taxes
consolidated calculations are not allowed.
Some States o Brazil allow establishments located inthe same State and under the same corporate entity, to
centralize the calculation o ICMS.
Can an overseas company be included in a VAT group?
In Brazil, entities belonging to the same economic group but
with distinct corporate identities are not allowed to calculate
their taxes jointly.
Returns
How requently are VAT returns submitted?
For each tax there is a specic requirement, set orth by the
applicable legislation.
ICMS: (GIA) Inormation and Calculation orm monthly
ISS: Declarao Eletrnica de Servios (DES) Electronic
Statement o Services monthly
IPI/PIS/COFINS: Declarao de Dbitos e Crditos
Tributrios Federais (DCTF) Federal contributions and
taxes statement monthly
PIS/COFINS: Demonstrativo de Apurao das
Contribuies Sociais (DACON) Demonstrative o
Calculation os Social Contributions monthly
Are there any other returns that need to be submitted?
Whenever interstate operations involving goods and services
take place, the tax authorities o the receiving state require
that the sender o such goods or the services rendered send,
on a monthly basis, electronic les containing inormation
regarding the operations perormed with that state.
A selection o some specic industries, have their ling more
closely scrutinized by the tax authorities.
2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member rms o the KPMG network o independent rms are aliated with KPMG International. KPMG International provides no client services. All rights reserved.
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6 | Brazil: Country VAT/GST Essentials
VAT Recovery
Can I recover VAT i I am not registered?
No.
Only those taxpayers who duly ulll the conditions
established by the law can benet rom tax credits. They
originate a right to credit, once they are non-cumulative
taxes. Thereore, they allow the oset o what is owed rom
each operation or installment with what has been previously
levied, in regards to the infow o goods or services,
accompanied by the appropriate scal document, issued
by a taxpayer in good standing beore the tax authorities.This rule does not apply to ISS.
Does your country apply reciprocity rules or reclaims
submitted by non-established businesses?
N/A
Are there any items that you cannot recover VAT on?
As general rule, it is possible to say that goods, services or
products do not generate a right to a credit at the time o
their infow i their outfow was tax exempt.
However, the legislation establishes exceptions to the
ollowing taxes:
ICMS:
When the goods or services coming in are:
unrelated to the company business
or integration in a product or use in a process o
industrialization or rural production o a product where
outfow is not taxed or is tax exempt
or commercialization or service rendering, when the
outfow or the service that ollows is not taxed or is tax
exempt
or use or consumption o the company itsel - understood
as goods that are not or commercialization or that are
not used as part o a product or or consumption in its
respective process o industrialization or rural production,
or in service rendering that is subject to tax.
IPI:
As a general rule, the infow o raw materials that are
intended or the industrial process, generates a right
to a credit.
PIS/COFINS:
In general, the infow o goods or services intended
or the industrialization and goods or resale generates
a right to a credit.
2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member rms o the KPMG network o independent rms are aliated with KPMG International. KPMG International provides no client services. All rights reserved.
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Brazil: Country VAT/GST Essentials | 7
International Supplies o Goods and Services
How are exports o goods and services treated?
Goods
The Brazilian Federal Constitution establishes that goods
intended or export have tax immunity.
Services
The Brazilian Federal Constitution establishes that services
intended or export have tax immunity.
How are goods dealt with on importation?
As a rule, import operations are subject to the ollowing
taxes: II (import duty), ICMS, IPI, PIS/COFINS.
Except or the import duty and ISS, all other taxes are non-
cumulative, that is, they do not generate a right to a credit.
The right to tax credits ollows the same rules applied on the
acquisition o assets carried out within the country and, as
a rule, goods or production or resale generate a credit right
derived rom those taxes.
How are services which are brought in rom abroadtreated or VAT purposes?
On importing o services, ISS, PIS and COFINS are paid.
This taxation is relatively recent. In act, ISS on importation
o services was established when the Complementary
Law 116/03 came into eect and, soon ater that, upon the
publication o the Ordinary Law 10.865/04, PIS and COFINS
also started to be levied on the importation o services.
There is no credit o ISS, considering that such tax is
cumulative. The contributions or PIS and COFINS levied on
the importation o services can be recovered, provided theservice imported is applied directly on industrial processes.
Invoices
What do I have to show on a tax invoice?
I you have to issue a tax invoice it should contain the
ollowing data:
In the Issuing box
the name or corporate name
the address
the city
the state or territory
the telephone and ax numbers and/or e-mail
the zip code
the corporate Taxpayer Registry enrollment number with
the Ministry o Finance
the kind o operation resulting rom the infow, such
as: sale, transer, return, shipping (or the purpose o
demonstration, industrialization, or other)
the CFOP code Fiscal Code on Operations and
Transactions
the state registration number
the denomination invoice
the kind o operation infow or outfow
the serial number o the Invoice and, immediately below
it, the expression Series, when applicable, ollowed by
the corresponding number
the number and destination o each copy o the Invoice
in the eld provided or indicating the deadline or the
issuance o the Invoice, 00.00.00
the day o issuance o the Invoice
the day in which the good eectively let the company
the time in which the good eectively let the company.
2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member rms o the KPMG network o independent rms are aliated with KPMG International. KPMG International provides no client services. All rights reserved.
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8 | Brazil: Country VAT/GST Essentials
In the box Receiver/Sender
the name or corporate name
the Corporate Taxpayer Registry enrolment number or
the Individual Taxpayer Registry enrolment number with
the Finance Ministry
the address
the zip code
the city
the telephone and ax numbers and/or e-mail
the state or territory
the state registration number.
In the box Fatura, when adopted by the sender: the
inormation established by the applicable legislation,
In the box Information of the Product
the code adopted by the establishment or product
identication purposes
the description o the products, including: name, brand,
type, model, series, kind, quality, and other inormation
that allow or their perect identication
the scal classication o the products, whenever
required by the legislation regarding IPI Tax on
Industrialized Products
the Cdigo de Situao Tributria CST Code o the Tax
Status
the unit o measurement used or quantiying the
products
the amount o products
the unit cost o the products
the total value o the products
the ICMS rate
the IPI rate, when applicable.
In the box Tax Calculation
the tax basis or calculation o ICMS
the amount o ICMS levied on the operation
the tax calculation basis used on assessing the amount
o ICMS withheld or tax withholding,
the amount o ICMS withheld or tax withholding,
the total value o the products
the reight cost
the insurance cost
the cost o other additional expenses
the total amount o IPI, when applicable
the total value o the invoice.
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In the box Carrier/Volumes Transported
the name or corporate name o the carrier or the
expression Sel-employed, when applicable
the reight payment condition i at the senders or
receivers expenses
the vehicle license plate number in case o road
transportation, or other indicative inormation, in case o
other means o transportation
the state or territory in which the vehicle is registered
the carriers Corporate Taxpayer Registry enrollment
number or the Individual Taxpayer Registry enrolment
number with the Finance Ministry
the address o the carrier
the City o carrier
the state or territory in which the carrier is domiciled
the state registration number o the carrier, when
applicable
the number o volumes transported
the kind o volumes transported
the brand o the volumes transported
the numerical sequence o the volumes transported
the gross weight o the volumes transported
the net weight o the volumes transported.
In the box Additional Information
in the eld Additional Inormation other inormation
that matters to the sender, such as: number o the order,
seller, issuer o the Invoice, place o delivery when
dierent rom the receivers address in accordance
with what is established in the applicable legislation,
advertising, etc.
in the eld For the Tax Authorities leave it blank, and in
case o a establishment located in the city o So Paulo,
the code o the tax department to which it is related with
clear indication o the expression Cdigo do Posto FiscalTax Service Oce
the control number o the orm, in case o an Invoice
issued through electronic data processing.
In the ootnote or on the right side o the Invoice, the name,
address, state registration, and Corporate Taxpayer Registry
enrollment numbers with the Finance Ministry o the printer
o the scal document; the date and amount o documents
printed; the serial number o the rst and last document
printed and their respective series, when applicable, and the
number o its authorization or printing scal documents.
In the product delivery receipt, that shall be part o the
original Invoice as a detachable slip, there should be:
the acknowledgment that the products have been
delivered
date in which the products were delivered
identication and signature o the receiver o the
products
the denomination Invoice
serial number o the Invoice.
2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member rms o the KPMG network o independent rms are aliated with KPMG International. KPMG International provides no client services. All rights reserved.
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10 | Brazil: Country VAT/GST Essentials
Can I issue invoices electronically?
The invoices may be issued through electronic data
processing, under the terms and conditions established
by the state tax authorities. However, even having their
issuance done by electronic data processing, the invoices
must be printed and be sent in hard copy together with the
merchandise.
The ICMS taxpayers (registered as a commercial or industrial
company, exporter and/or importer) should submit, in digital
les, inormation regarding the operations and servicerendering carried out, under the terms established by the
state tax authorities.
Is it possible to operate sel-billing?
As a rule, sel billing is not allowed. Only under specic
conditions, established in the legislation, can sel-billing be
perormed at the moment the good or service eectively
enters the establishment, in a real or symbolic sense:
new or used, sent or whatever reason by a producer
or individual or company not required to issue scal
documents
in return, when sent by a sel-employed or reelanceproessional to which such product had been sent or
manuacturing purposes
in return rom exposition or air, to which it had been
sent exclusively or the purpose o public exhibition
in return o shipment or sale outside the establishment
in return, when undelivered to receiver
imported directly rom abroad
successully bided or or bought in auction or biddings,
promoted by Public Authorities.
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Brazil: Country VAT/GST Essentials | 11
Transers o Business
Is there a relie rom VAT or the sale o a business as a
going concern?
Yes. I you sell your business while it is in operation, then
VAT cannot be levied. However, it is a requirement or this
benet, that the company is sold with all its assets and
inventory, without any moving o such assets, otherwise
taxes shall be levied.
Options to Tax
Are there any options to tax transactions?
No.
Head Ofce and Branch Transactions
How are transactions between head ofce and branch
treated?
ICMS is levied on operations involving asset transerring
rom headquarters to branches, once the trigger actor
is the circulation o goods. IPI is levied in case the good
is industrialized. However, or this kind o operation, the
legislation allows the suspension o payment o the IPI.
PIS and COFINS are not levied, as there is no revenue
coming rom the sale o assets or services resulting rom
this operation. Thereore, there is no triggering event orthese taxes.
ISS is not levied, as there is no billing o services between
headquarters and branch, considering that the triggering
event or this tax is the rendering o remunerated services.
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12 | Brazil: Country VAT/GST Essentials
Bad Debt
Am I able to claim relie or bad debts?
Under the Brazilian legislation there is no relation between
payment resulting rom a commercial transaction and
payment o taxes. A tax is levied on the perormance o the
operation, independently rom the achievement o nancial
return. Even i the company is not able to recover all its debts
related to the sale o goods or services, the legislation does
not provide any benets related to unrecoverable debts.
Anti-Avoidance
Is there a general anti-avoidance provision under
VAT law?
Yes. The Complementary Law 104 dated 10 January 2001,
has added a single paragraph to article 116 o the Brazilian
Tax Code (CTN), introducing, or tax purposes, the possibility
o subjective interpretation o judicial acts, by the tax
authorities. Consequently compliance to the law is not
enough. What it is argued is i a specic operation could
be generating a lower taxation.
The above-mentioned concept addresses the disregard tojudicial acts when perormed with the purpose o concealing
the occurrence o a tax-triggering event, and thereore, a
perectly legal act could be considered nil.
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Brazil: Country VAT/GST Essentials | 13
Penalty Regime
What is the penalty and interest regime like?
There are several ways o penalizing companies who
have ailed to ulll their obligations, either main or
ancillary obligations.
Accessory obligations are those that result rom the main
one and whose non-ulllment does not aect the latter.
The penalties established by law range rom BRL 20 to
150 percent o the total value o the operations that have
ailed to be taxed, with the addition o monthly deaultinterests charged on the amount o the debt, in case o non
payment o taxes.
In this sense, or each ailure o meeting an obligation there
is a specic penalty.
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The inormation contained herein is o a general nature and is not intended to address the circumstances o any particular individual
or entity. Although we endeavor to provide accurate and timely inormation, there can be no guarantee that such inormation is
accurate as o the date it is received or that it will continue to be accurate in the uture. No one should act on such inormation
without appropriate proessional advice ater a thorough examination o the particular situation.
2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member rms o the KPMG network o independent
rms are aliated with KPMG International. KPMG International provides no client services. No member rm has any authority to
obligate or bind KPMG International or any other member rm vis--vis third parties, nor does KPMG International have any such
authority to obligate or bind any member rm. All rights reserved.
The KPMG name, logo and cutting through complexity are registered trademarks or trademarks o KPMG International.
Designed by Evalueserve.
Publication name: Brazil Country VAT/GST Essentials
Publicat ion number: 111202
P bli ti d t J 2012
www.kpmg.com
http://www.kpmg.com/http://www.kpmg.com/