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Doing Business in Brazil
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Financial Transaction Tax (IOF) is levied over credit, foreign exchange, insurance and security transactions. The IOF rates can apply varying from zero to 25% depending on the nature of the transaction.
3. Payroll Taxes
3.1. Social Security Contribution (INSS) – See employment rela- tions page 31
Brazilian companies are required
to pay the Social Security Contributions (INSS) at 20% on the total compensation paid to their employees and/or individual service providers. Except for certain cases provided by legislation and case law, social contributions also apply to fringe benefits.
In addition, other social charges (SAT, Contributions to SESI/SESC, SENAC/ SENAI, INCRA, SEBRAE, Educational- Salary), varying from 6% to 12%, can be applied over the employees’ wage with variable rates depending on the economic category of company’s activities.
For certain industry sectors (e.g.
IT, civil construction and certain infrastructure services), the companies may opt to pay the Social Security Contribution on Gross Revenues (CPRB) at statutory rates varying from 1.5% to 4.5% over the company´s gross revenue, instead
of the INSS contribution over the payroll. The option should be made on an annual basis.
4. Property and Transfer Taxes
Brazilian tax system also provides for certain taxes and contributions levied on the ownership and transfer of real estate, vehicles and other assets:
4.1. Rural Real Estate Tax (ITR)
Rural Real Estate Tax (ITR) is a federal tax, imposed on an annual basis, over the ownership or control of real estate property in rural areas. The ITR rate may vary between 0.03% and 20%, based on the location, size of the property and other factors such as the level of use.
4.2. Urban Real Estate Tax (IPTU)
Urban Real Estate Tax (IPTU) is a Municipal tax levied annually over the ownership or control of real estate property in urban areas. The rates may vary usually between 1% and 1.5% for constructed urban areas and 2% and 3% for unconstructed urban areas.
4.3. Tax on Ownership of Vehi- cles (IPVA)
Tax on Ownership of Vehicles (IPVA) is a State tax, levied annually, over the ownership of ground vehicles such as cars, motorcycles, buses and others. The rates may vary usually between 2% and 4% of the commercial value of the vehicle.
4.4. Real Estate Transfer Tax (ITBI)
Real Estate Transfer Tax (ITBI) is a