The Brazilian tax system is structured at three levels of government (federal, state, and municipal). There are more than 80 different taxes and is known for having disperse legislation and high degree of complexity.

The main corporate taxes fall under federal jurisdiction and are levied on gross income (“PIS” and “COFINS”), profit (Corporate Income Tax – “IRPJ” and Social Contribution on Net Profits – “CSLL”) and salary payroll (Social Security Contribution on Payroll – “INSS”).

The taxes levied on consumption are divided between the three levels of government. The Federal Government is responsible for levying tax on foreign trade (Import Tax – “I.I” and Export Tax – “I.E”), the value-added on each phase of industrial/manufacturing process (Excise Tax Federal Vat – “IPI”), and on financial transactions (Tax of Financial Transactions – “IOF”).

On the other hand, States and Federal District levy tax on value-added transactions on transfer of good, and on interstate and inter-municipal transport service, moreover communications services (State Vat – “ICMS). Municipalities levy a tax on the rendering of services (Services Tax – “ISS”).

The ownership of rural land is taxed by the Federal Government (Tax on Ownership of Rural Land – “ITR”), whereas motor vehicles by the States (“IPVA”) and urban property by the Municipalities (IPTU).

In addition, States levy a tax on inheritance and gifts/donations (“ITCMD”), while Municipalities on the sale, purchase or assignment of real estate or related rights (“ITBI”).

Tax Compliance
The ascertain of taxes in Brazil and the ancillary obligations are a challenge for the opening of new companies.

There are 3 main accounting methods for corporate taxes in Brazil: actual profit (known as “lucro real”), presumed profit (“lucro presumido”) and a regime applicable to small companies (“SIMPLES NACIONAL”).

Also, there are a series of information that must be provided at different levels of government (tax reporting) as well as specific duties on payroll and labor registration.

Manesco advises and helps new companies in choosing the best taxable model among the available options, in addition to understanding the general legislative framework of taxation in Brazil.

Tax Litigation
Manesco provides administrative and judicial litigation, especially in the sponsorship of individuals and legal entities in annulment actions, declaratory actions, repetitions of undue payments and writ of mandamus involving direct and indirect taxes. We have expertise in regulated sectors, especially infrastructure and telecommunications.