The 2012 worldwide VAT, GST and sales tax guide

86 B RAZIL
ISS. ISS taxpayers do not recover any ISS paid as input tax.
Consequently, ISS paid is borne as a cost by all recipients of
services subject to the tax.
PIS-PASEP and COFINS. PIS-PASEP and COFINS taxpayers who
use the noncumulative system are entitled to calculate PIS-PASEP
and COFINS credits to offset PIS-PASEP and COFINS payments.
Credits are limited to certain costs.
Nondeductible input tax. For ICMS and IPI purposes, input tax
may not be recovered on purchases of goods and services that are
not used for business purposes (for example, goods acquired for
private use by an entrepreneur or general overhead costs), or on
goods acquired before registration as a taxpayer.
Refunds. If the amount of input tax recoverable exceeds the
amount of output tax payable, the excess is generally not refunded.
However, the excess may be used to offset tax payments in the
following months or may be transferred in certain cases to a third
party.
F. Recovery of VAT by nonestablished businesses
Brazil does not refund any form of VAT incurred by businesses
that are neither established nor registered for VAT in Brazil.
G. Invoicing
VAT invoices and credit notes. An ICMS, IPI or ISS taxpayer must
generally provide a VAT invoice for all taxable supplies made,
including exports. A VAT invoice is necessary to support a claim
for input tax deduction for ICMS and IPI.
A credit note (input invoice) must contain the same information
as a VAT invoice, but it is not valid in all situations.
Proof of exports for ICMS. ICMS is not chargeable on supplies of
exported goods. However, to qualify as VAT-free, exports must be
supported by evidence confirming that the goods have left Brazil.
Suitable evidence includes an invoice, a customs certificate of
origin and an export declaration.
Foreign-currency invoices. All VAT invoices must be issued in
Brazilian reais (R$).
H. VAT returns and payment
ICMS. ICMS returns must be submitted for monthly periods. The
VAT return consists of the following two parts:
• A payment receipt (GARE)
• An ICMS declaration detailing all ICMS credits and debits
during the period
The specific date for submission depends on the taxpayer’s business
activities.
Return liabilities must be paid in Brazilian reais.
IPI. IPI is generally payable every month (depending on the type
of products sold), using a payment receipt (DARF). Return liabilities
must be paid in Brazilian reais.
For IPI, the following two different returns are required: