The 2012 worldwide VAT, GST and sales tax guide

84 B RAZIL
ISS taxpayer. An ISS taxpayer is any person or legal entity that
supplies any services listed in the ISS law on a regular basis. No
turnover threshold applies. Any person or entity that carries on
activities subject to ISS must register in the roll of ISS taxpayers
before beginning activities.
PIS-PASEP and COFINS. A PIS and COFINS taxpayer is any
company that has business activities. Contributions are levied on
companies’ gross revenue on a monthly basis.
Group registration. VAT grouping is not allowed under Brazilian
VAT laws.
Nonestablished businesses. A “nonestablished business” is a
business that has no fixed establishment in Brazil. A nonestablished
business is not permitted to register for VAT in Brazil.
Only entities that are established under Brazilian law may
become taxpayers for the purposes of ICMS, IPI, ISS, PIS-
PASEP or COFINS.
Late-registration penalties. The penalty for late registration for
ICMS is a fine, which may vary from 1% to 80% of the value of
the transactions that occurred before registration. Penalties also
relate to several IPI, PIS-PASEP, COFINS and ISS errors, including
failure to register (see Section H).
D. VAT rates
ICMS. ICMS rates vary from state to state. Brazil has 27 states. For
supplies made to a customer located in the same state as the supplier,
rates typically range from 1.5% to 35%. The standard rate
of ICMS is 17% (18% in São Paulo and 19% in Rio de Janeiro).
ICMS may also be charged at 0%. Reduced rates generally apply
to items of basic necessity, such as food. In addition, some items,
such as medicines, are exempt from ICMS.
The rate of ICMS that applies to imported goods is the same rate
that applies to supplies of goods made within the state, except
that the tax base for imported goods includes any IPI and import
duty (II) payable at import. ICMS does not apply to exported
goods.
The ICMS rate on a supply of goods or services made to an
ICMS taxpayer resident in a different state from the state where
the supplier is resident depends on where the customer is resident.
The following are the rates:
• A rate of 7% generally applies to supplies made to taxpayers
resident in states located in the northern, northeastern and central
eastern regions of Brazil and in the state of Espírito Santo.
• A rate of 12% generally applies to supplies made to taxpayers
resident in the states in the southern and southeastern regions
of Brazil (except in the state of Espírito Santo).
If the supply is made to a customer resident in another state who
is not an ICMS taxpayer, the supply is taxed at the same rate as
transactions made within the supplier’s state (internal rate).
IPI. IPI rates vary from a zero rate (0%) to 330%. The rate of IPI
chargeable on a supply of finished goods depends on the classification
of the goods under the IPI Tariff Table. The table contains
9,728 different classification codes. The IPI Tariff Table