Brazil has a progressive personal taxation system under which individuals are taxed up to a maximum of. However, it is the complexities involved in calculating taxes on the importing of. Is it true that, in brasil, the sale of software attracts a. It is important to check the subclassifications as there are a wide variation of import tax rates. Brazil is a federal republic, and each of the 26 states and the federal district has their own legislation. The intermediary later files a tax return and forwards the tax. Can a software saas company based out of the us sell their. Brazil sales tax rate vat data, historical chart, and calendar of releases was last updated on february of 2020 from its official source. Imports and fulfilment of ecommerce from abroad to brazil.
In addition to the state vat icms, the federal vat ipi, and the pis and cofinsimport taxes, the federal government also assesses custom duties ii on the import of products into brazil. Ipi excise tax is due, with a few exceptions, on all goods imported or manufactured in brazil. These tariff rates range from zero to 35 percent according to the product. The brazilian tax on industrial products bpc partners. There is no tangible product as such and therefore no duty is collected by an agent, such as fedex or kamino. As for customized software they are considered services, which means that their importers have to pay iss, irff, piscofins import, besides of cidtechnology referring to the money sent abroad for s. In most cases, brazilian import duty rates range from 10 percent to 35 percent. Mar 14, 2016 brazils tax laws have generally not been updated to address cloud computing transactions and there is no clear guidance in brazils tax regulations as to the taxation of cloud computing. For the importation of saas the following taxes are applied. In this sense, its rate is set according to the economic and social utility of the product. The tax regime applicable to software transactions in brazil is quite complex. Taxation on import of services to brazil iss brazbiz.
You may find a brief explanation of the tax scenario for software and services in the posts below. The tax, collected by the municipality where property is located, is calculated on a deemed sales price of the property. Import duty is a federal productspecific tax levied on a cif cost, insurance, and freight basis. The fulfilment agent will anticipate the import duties in brazil and the foreign merchant will only get paid after the goods are sold to the brazilian consumer.
Currently, there are 33 income tax treaties in force in brazil. Apr 03, 2015 not unless you want to pay an large % tariff on the saas transaction. Corporate tax laws and regulations brazil covers common issues in corporate tax laws and regulations including capital gain, overseas profits, real estate, antiavoidance, beps and the digital economy in 33 jurisdictions. An indirect tax such as sales tax, value added tax vat, or goods and services tax gst is a tax collected by an intermediary such as a retail store from the person who bears the ultimate economic burden of the tax such as the customer. The rates vary according to the products tariff code based on mercosur harmonised system ncmsh, usually ranging from 10% to 20% there are some exceptions, but the maximum consolidated rate is 35%. But our brazil import and export duty rates calculator can help calculate the costs. The identification of your customs codes in brazil is one of the first steps necessary to start an import. I can see that there is an import duty of 16% on software imports to brazil, but cannot see anything for the other 44%. Import duty ii is a federallymandated productspecific tax levied on a cif cost, insurance, and freight basis. Import taxation of downloaded software by brazilian corporations standard software in answers to advance tax ruling requests, the federal revenueofficestatedthat. A customer in brazil is telling us that they have to pay 60% of the purchase price on top of every software product they buy from us.
The brazilian import tax varies according to the products characteristics and country of origin. Brazils import tariffs follow the mercosur cet, with few exceptions. Imports are subject to several taxes and fees in brazil, which are usually paid during the customs clearance process. Because of that, standard software are seen as goods, so their import collects icms, ipi and ii import tax, as any other imported good. Sep 12, 2011 when you import services from abroad, you will also need to consider the collection of iss service tax, because the foreign service provider is not available to the taxation of brazilian law. Please do not take this as a final answers to your questions. Calculate import duty and taxes in the webbased calculator. Selling software, saas or consulting services to brazil may be subject to heavy taxation. In order to understand software import taxation in brazil, it is important to know the various opinions that revolves around this kind of business. In general, import duty rates range from 10% to 35%. Taxes on the import and export of cloud services in brazil. Is it true that, in brasil, the sale of software attracts. Brazil and the us do not have a favorable nation status or a trading agreement.
Majority of products will incur customs duty on gifts and other goods sent from outside of brazil if theyre above a certain value. Jun 19, 2018 the local agent in brazil have an import license allowing them to import a larger batch of goods to brazil with lower import duties in comparison to imports by the consumer directly. Its levied on foreign products in order to prevent unfair competition with brazilian products. Doing business in brazil and understand the costs of duty can be challenging. Brazils anticorruption laws 303 doing business in brazil 2018 trench rossi watanabe 1 importing into brazil import licensing imports into brazil are subject to government control from at least three levels of authority. In keeping with brazils economic policies, these rates can change at any time. Importing software into brazil the brazil business. How to calculate brazilian import duties and taxes the. Canadexport is launching a new column called ask the trade commissioner service, where entrepreneurs ask a businessrelated question. Brazils ministry of economy publishes a complete list of ncm products and their tariff rates on its website. An it consultancy client buys software licences from the us and sells them on to uk businesses as part of its service. Import taxation of downloaded software by brazilian corporations. The income characterisation and tax treatment of software transactions has been raising controversies and conflicts in brazil for a long time. Importing brazilian products as a business venture represents a timely and growing opportunity.
This transfer of responsibility for the tax payment is known as the taxpayer substitution regime the taxation in brazil is based on physical movement of products, not only on sales. As per explanation 3 to section 91vi of the income tax act, 1961 the act, computer software means any computer programme recorded on any disc, tape perforated media or other information storage device and includes any such programme or any. Credit is given with respect to the ipi tax paid on raw materials or component parts used in the finished product or consumed in production. There are different federal, state and municipal taxes that are potentially applicable to software. However, to try and give you a short answer, software that is imported into brazil on cds would be subject to the usual taxes applicable to products. Its fast and free to try and covers over 100 destinations worldwide. How to calculate brazilian import duties and taxes is the question most asked by foreigners wanting to export goods into the country. I have been advising several companies on how to save taxes on these transactions. The import tax ii protects brazils domestic industries and produce from foreign competition. Brazilian tax system when it comes to software imports takes into account different situations to determine if there.
Real estate tax the real estate property tax imposto predial e territorial urbano iptu is an annual tax assessed on the ownership of urban real property. However, all too often a complicated explanation is given about the brazilian tax system and the various rules that apply. Products delivered to brazil are subject to import duties. Brazil, with one of the worlds fastestgrowing economies, exports a wide range of goods to the united states and many other countries all over the world. For brazil, common external tariff on application concerns roughly 85 % of the products in circulation. Import costs include the import duty ii, the merchandise and service circulation tax icms and the industrialized product tax ipi. There are currently 5 different import duties and taxes ii, ipi.
Software as a service saas arrangements are generally taxed as a service. It is a relatively simple process, but to maximize your chances of. The import tax is a federal tax that exists mainly for economic regulation and protection. Customs code classification and revision ncm novatrade. Rates vary according to the ncm code of each product, which is based on the harmonized system codes hs codes. Every product that arrives in brazil, either permanently or temporarily is subject to the customs clearance for importation process. Ncm codes determine the import duties and taxes you will need to pay for each of your products. Imposto sobre a importacao, or simply ii in portuguese, is an import duty that applies to the entrance of foreign products into brazil it is determined by the products ncm and paid by the importer, the recipient of the international shipping named by the sender, those who are acquiring the commodity and the bidder of seized or abandoned products. Brazils tax laws have generally not been updated to address cloud computing transactions and there is no clear guidance in brazils tax regulations as. Aug 03, 2015 the operation may be subjected to tax in the receiving country. Icms is the most challenging as it is a state specific tax that is dependent on the destination state in brazil. Before the changes introduced for 20 onwards, the transfer pricing law considered freight and insurance costs and the brazilian import duty costs borne by the brazilian taxpayer as an integral part of import costs i. The import tariff rate is applied to the customs value of the goods. Import taxes excluding consumer taxes the cost of importing is composed of an import tax ii, taxes on the standard added value icms and a tax which is added to industrial products ipi.
The income characterisation and tax treatment of software. The payment will be free of withholding taxation, especially. This gives rise to 27 regulations on indirect state taxes, meaning varying application, administration and compliance rules in each state. Foreign nationals who are not tax resident are required to pay tax only on their income from brazilian sources, at a rate of 25% on earned income and 15% on unearned income. To my knowledge, it does not pay import duty on these licences. In case of services hired from a local distributor inside brazil, the following taxes are applied. The term software is generally understood to mean computer software though the term software is not restricted only to computer software. Software taxation in brazil new tax war among states and municipalities promises to raise a lot of issues to taxpayers in 2018 the understanding that had been pacified by the supreme courts jurisprudence re 176. Federal import taxes should not be charged on the foreign softwareinternetsalesii,ipi,pisandcofins. The tax is paid upon import or on the manufacture of a product. The import tax is not creditable for the importer, and may not be used offset.
The import duty is levied upon the nationalization of the goods. Currently, brazil confronts heated discussions on how to collect taxes from the commercialization of software in the country, as we still have not a established article in our tax system contemplating all the possible aspects of this activity. Brazils government sets product classifications that determine rates for specific products. The import duty is a federally mandated product specific tax levied on a cif basis. With each ncm code comes a different percentage of import duties and taxes. Corporate tax 2020 laws and regulations brazil iclg. The import duty ii is a federal tax levied on permanent import of goods into brazil and is also referred to as import tax or customs duty. Some exceptions exist as for the 23 % maximum rate or for a harmonized taxation. Brazils federal and state taxes applied to imported goods.