If you are willing to do business in Brazil, you have to know about taxation for a LLC which is the most common company structure in Brazil.
Brazil taxes corporate income on a worldwide basis. The usual rate for offshore income, from our research, and this is not personal tax advice, is 34%. The country does not have known exemptions to bring in offshore income remitted back. Corporate Income standard tax rate is 15%. A surtax of 10% is applied on income exceeding BRL 240,000. In addition, there is a 9% social contribution tax, being 20% for financial institutions. Resulting in a 34% effective tax rate. This ranks Brazil as 162nd overall with regards to corporate tax rate worldwide.
The valued added tax rate in Brazil is 20.00%, that ranks Brazil as 133rd overall with regards to VAT taxation rate internationally. In terms of other taxation, an employer will contribute 28.00% to the equivalent of a social security fund and an employee will contribute 11.00%. The overall complexity of the tax system is high. This is measured by average time to comply with a country's labor tax requirements is as it is 490hours. Contributing to this is the number of yearly labor tax payments, which is 6 in BR.
Thin cap laws are officially enacted. This refers to any type of requirements on given company with respect todebt-to-asset ratios. Dividends received from resident entities are tax-exempted. Dividends received from foreign companies are included in taxable income. Dividends are distributions of company profits, established by the board, to a class of its shareholders. Dividends can be issued as stock, cash, or property. Capital Gains are considered business ordinary income and subject to CIT standard rates. A capital gains tax is levied on the profits that a corporation or natural person realizes when he or she sells sells a capital asset for a price that is higher than the purchase price.
Dividends are not subject to withholding tax. This means that payments on dividends to non-residents are not taxed. The interest withholding tax rate is estimated at 15%. Which means that the relevant tax authorities expects LLCs to automatically withhold 15% of payments abroad for interest payments. Royalties are subject to a withholding tax of 15%. This means that resident entities should pay 15% tax on payments on royalties to non-residents. Royalty and interest payments will be taxed at a 25% wht rate when are made to residents of considered low-tax jurisdictions. Withholding taxes may be reduced on payments to residents of jurisdictions where Brazil has concluded a tax treaty with.
There is no known tax on wealth in Brazil. There are inheritance, real property and transfer taxes in Brazil. We are aware of frequently implemented credits for innovation that include tax incentives in this country.
The above is not tax or legal advice for your company situation. We can to refer you to a tax advisor in Brazil who can give you an answer. Want to work together? Click incorporate now if you are in a hurry, or press the free consultation button above.
It takes approximately 736 hours to file and prepare documents for a Brazil Civil Law (Portuguese).
The corporate tax is approximately 34% which is 162 in the world.
Owners of a company in Brazil are not allowed to carry back a loss and may be allowed to carry forward a loss for 100 years.
The vat rate in Brazil is 20% which ranks 134 in the world.